Hillary says No

Posted: March 16, 2011 | Author: | Filed under: Democratic Politics, Diplomacy Nightmares, Domestic Policy, Egypt, Foreign Affairs, Hillary Clinton, Tunisia | Tags: , , , | 25 Comments

CNN’s Wolf Blitzer has released an interview with SOS Hillary Clinton. Blitzer asked if she was going to either serve a second term or run for President in 2012.  This is pretty clear evidence the Clinton is planning on returning to private life shortly. Blitzer interviewed Clinton during her visit to the U.S. Embassy in Cairo on March 16, 2011.

Q- If the president is reelected, do you want to serve a second term as secretary of state?

No

Q- Would you like to serve as secretary of defense?

No

Q- Would you like to be vice president of the United States?

No

Q- Would you like to be president of the United States?

No

Q- Why not?

Because I have the best job I could ever have. This is a moment in history where it is almost hard to catch your breath. There are both the tragedies and disasters that we have seen from Haiti to Japan and there are the extraordinary opportunities and challenges that we see right here in Egypt and in the rest of the region. So I want to be part of helping to represent the United States at this critical moment in time, to do everything I can in support of the president and our government and the people of our country to stand for our values and our ideals, to stand up for our security, which has to remain first and foremost in my mind and to advance America’s interests. And there isn’t anything that I can imagine doing after this that would be as demanding, as challenging or rewarding.

Q- President of the United States?

You know, I had a wonderful experience running and I am very proud of the support I had and very grateful for the opportunity, but I’m going to be, you know, moving on.

Q- I asked my viewers and followers on Twitter to send questions and a lot of them said, “Ask her if she’ll run in 2016 for the presidency.” A lot of folks would like to you to do that.

Well that’s very kind, but I am doing what I want to do right now and I have no intention or any idea even of running again. I’m going to do the best I can at this job for the next two years.

Clinton also spoke of democratic reforms in Egypt while visiting that nation and Tunisia. She was greeted with protests in Tunisia.

Clinton toured Cairo’s Tahrir Square, the epicenter of the pro-democracy uprising that led to last month’s resignation of Egyptian President Hosni Mubarak.

Clinton said visiting the square was a “great reminder of the power of the human spirit and desire for freedom and human rights and democracy.”

She was welcomed by Egyptian citizens and shook hands with passersby in the square before meeting with Egyptian Prime Minister Essam Sharaf.

Before leaving for Tunisia on Wednesday, Clinton was set to meet with Arab League Secretary General Amr Moussa. Moussa, 74, is a veteran Egyptian diplomat and has announced his candidacy for the country’s presidency.

Clinton also met with pro-democracy activists and members of Egypt’s civil society. She is the highest-ranking U.S. official to visit Egypt since the anti-government protests.

Clinton arrived in Cairo Tuesday after attending a Group of Eight foreign ministers’ meeting in Paris.

After wrapping up talks in Egypt, she travels to Tunisia – the starting point of the pro-democracy movement that has swept through much of the Middle East and North Africa this year.

Dozens of Tunisians took to the streets in Tunis on Wednesday to protest against Clinton’s visit.  The demonstrators said they oppose foreign intervention in their country.

There appears to be no break through in her meetings with the G8 in terms of backing a no-fly zone for Libya.  While she met with Egypt’s Prime Minister, some details of their meeting have not been released.

On Tuesday, Clinton issued a strong statement of praise for Egypt’s political revolution, declaring she was “deeply inspired” by the dramatic change and promising new assistance for America’s longtime Middle East ally.

Clinton pledged $90 million in emergency economic assistance during a meeting in Cairo with Foreign Minister Nabil Al-Araby. She is the highest ranking U.S. official to visit Egypt since the overthrow of Mubarak.

“The United States will work to ensure that the economic gains Egypt has forged in recent years continue, and that all parts of Egyptian society benefit from these gains,” a State Department statement noted.

She’s not yet discussed her plans after she retires from the position of US Secretary of State.

Food and Gas Prices are on the Rise

Posted: March 16, 2011 | Author: | Filed under: Economy | Tags: | 6 Comments

The labor department released price indexes that show that how tame inflation has been in every area except two essential things:  food and oil.  Most consumers do not follow the Wholesale Price Index.  This is because it takes awhile for price increases in wholesale items to translate into inflation at the retail level.  It doesn’t  translate into a one to one increase either so it’s not a precise indicator of future inflation.  Economists are interested in the wholesale index because its usually a precursor to future general price movement.  The index was up 1.6 percent with most of the increase attributable to food or energy.  These are price increases considered outside ‘core’ inflation.  I wanted to explain some differences in inflation measures to you so you know how to understand this information.

Economists generally track the GDP deflator and the core PCE.  The GDP deflator is the broadest of all the price indexes that measure inflation (price increases) or deflation (price decreases).  It’s a weighted index that relies on the buying habits of current year/quarter/month GDP to weight the various contributions of price changes of goods and services.  Thing bought more frequently or with larger prices have a larger weight in the index.  The Consumer Price Index or CPI relies on a fixed basket or typical budget to weight the contributions of price changes to the selected group of consumer items in that index.  The Personal Consumption Expenditure index or PCE is similar to the CPI in that it measures just retail prices like the CPI but it uses the average prices increases using weights on each price from the current and preceding periods.  It does not rely on the fixed basket which can be seen as a typical household budget.   This index removes some of the problems inherent with using the CPI that relies on its fixed basket.   The most notable problem is the substitution impact which means people move their budgets around when prices change.  They substitute one item for another.  This switch isn’t captured when the index relies on a fixed basket that doesn’t change very often.

The importance of the ‘core’ inflation measures cannot be understated here. Core indexes don’t include the most volatile items. Food and energy prices are typically removed from core indexes because they are subject to ‘shocks’ from bad weather and supply disruptions.  We’re seeing a large number of disruptions right now from both weather and the political unrest in oil producing countries.  Future inflation at the retail level will show up first in wholesale prices so the Wholesale Price index is seen as a predictor of future, overall, inflation.  What we’re seeing now is the impact of price instability from food and energy which are not part of  core inflation  but are highly essential to both businesses and households.  Energy is obviously important to developed economies.  Food is an essential expenditure in developing nations both as an important and export.

The Labor Department said Wednesday that the Producer Price Index rose a seasonally adjusted 1.6 percent in February — double the 0.8 percent rise in the previous month. Outside of food and energy costs, the core index ticked up 0.2 percent, less than January’s 0.5 percent rise.

Food prices soared 3.9 percent last month, the biggest gain since November 1974. Most of that increase was due to a sharp rise in vegetable costs, which increased nearly 50 percent. That was the most in almost a year. Meat and dairy products also rose.

Energy prices rose 3.3 percent last month, led by a 3.7 percent increase in gasoline costs.

Separately, the Commerce Department said home construction plunged to a seasonally adjusted 479,000 homes last month, down 22.5 percent from the previous month. It was lowest level since April 2009, and the second-lowest on records dating back more than a half-century.

The building pace is far below the 1.2 million units a year that economists consider healthy.

There was little sign of inflationary pressures outside of food and energy. Core prices have increased 1.8 percent in the past 12 months.

So, what does this mean besides higher grocery bills and fill ups at the gas station?  Well, first it means that households will have to rearrange their budgets so more money will go to these things than other things.  But, there’s other news that could offset some of this.  Oil prices are actually falling on the news of Japan’s nuclear problems.

Gas prices spiked in February and are even higher now. The national average price was $3.56 a gallon Tuesday, up 43 cents, or 13.7 percent, from a month earlier, according to the AAA’s Daily Fuel Gauge. Rising demand for oil in fast-growing emerging economies such as China and India has pushed up prices in recent months. Turmoil in Libya, Egypt and other Middle Eastern countries has also sent prices higher.

But economists expect the earthquake in Japan to lower oil prices for the next month or two, which should temper increases in wholesale prices in coming months. Japan is a big oil consumer, and its economy will suffer in the aftermath of the quake. But as the country begins to rebuild later this year, the cost of oil and other raw materials, such as steel and cement, could rise.

Oil prices fell sharply Tuesday as fears about Japan’s nuclear crisis intensified. Oil dropped $4.01, or 4 percent, to settle at $97.18 per barrel on the New York Mercantile Exchange.

There are several other things in this report. First, most of the food price increases appear to be due to really bad weather in several countries.  The other more worrying contributor was the increased demand by ethanol producers for crops.  This is due to increased subsidies.  It seems really weird that we’re willing to cause hunger just for some energy production but that appears to be a building, long term issue.  Second, the cost of clothing appears to be on the increase.  This may be due to the increased costs of transportation coming with the oil or it might be an indication of future inflation.  Prices rose 1 percent for clothing.  That was the most in 21 years. Costs also increased for cars, jewelry, and consumer plastics.  Many of these items also use petroleum products as well as require transportation.  That’s a possible explanation for the price change so that would be more temporary than permanent.   So, while its cheaper to buy electronics and such, it’s much more expensive to eat and drive around for the time being.  Too bad we can’t eat our MP3 players.

I’m sure the FED is watching this since many gold bugs will see this as proof that the QE2 is ratcheting up the money supply and creating inflation.  The problem with this explanation is that the majority of these price increases can be attributable to fundamentals in markets that are typically volatile anyway.  At this point, I still wouldn’t worry about inflation if I were in charge of policy.  I’m still focused on the horrible unemployment rate and the recessionary pressures that decreased state and federal spending will bring.  My best guess is that as folks adjust their budgets for food and gas price increases that we’ll see some pretty good sales on other things.  You’ll feel these price increases more  if you’re poorer and your budget is mostly food and gas expenditures.  Otherwise, you’ll see offsets in other expenditures so it will just shift your expenditures around.

Backlash

Posted: March 15, 2011 | Author: | Filed under: 2012 presidential campaign, Barack Obama, collective bargaining, Democratic Politics, Domestic Policy, Elections | Tags: , , | 34 Comments

The only positive thing to come out of the Tea Party, its John Birch Society Roots and funding sources, and its election of right wing reactionaries is the amount of backlash that is coming as a result of imposing their extremist policies.  Their agenda is obvious. Many of the states that are suffering at the hands of governors and legislators that are more interested in ideology than solutions for their state’s problems are looking at recalls. It seems there’s a huge amount of blow-back now.  Just check out some of these polls.

Public Policy Polling reports on “brutal numbers” for Ohio’s John Kasich.  Not only do independents and nonunion households support a recall of his collective-bargaining killing bill, they don’t support him. They want him gone.

Ohio Senate Bill 5 may not be in effect for very long…54% of voters in the state say they’d repeal it in an election later this year while just 31% say they’d vote to let the bill stand.

The support for repealing SB 5 is reflective of a high level of support for unions and workers in Ohio, more so than we saw in Wisconsin a couple of weeks ago. 63% of voters in the state supportive collective bargaining for public employees to only 29% who oppose it. 52% of voters think public employees should have the right to strike, to 42% who think they should not. And 65% think public employees should have the same rights they do now- or more- while only 32% believe they should have fewer rights.

There are two things particularly notable in the crosstabs on all of these questions. The first is that non-union households are supportive of the public employees. 54% support their collective bargaining rights to 36% in opposition and 44% say they would vote to repeal SB 5 to 38% who would let it stand. Obviously that level of support is not nearly as high as among union households but it still shows that the workers have even most of the non-union public behind them.

The other thing that’s worth noting is the independents. A lot of attention has been given to the way what’s been going on in Ohio and Wisconsin is galvanizing the Democratic base, but it’s also turning independents who were strongly supportive of the GOP in the Midwest last year back against the party. 62% of independents support collective bargaining for public employees to 32% opposed and 53% support repeal of SB 5 to 32% who would let it stand.

All of this is having an absolutely brutal effect on John Kasich’s numbers. We find him with just a 35% approval rating and 54% of voters disapproving of him. His approval with people who voted for him is already all the way down to 71%, while he’s won over just 5% of folks who report having voted for Ted Strickland last fall. Particularly concerning for him is a 33/54 spread with independents.

The site calls this “significant buyer’s remorse”.  This is the pollster for DKos that has polled on the Wisconsin effort to recall at least 8 Republican State Senators.

Three Republican incumbents actually trail “generic Dem”: Luther Olsen, Randy Hopper, and Dan Kapanke. Two more have very narrow leads and garner less than 50% support: Rob Cowles and Sheila Harsdorf. And one more, Alberta Darling, holds a clear lead but is still potentially vulnerable. (Two recall-eligible senators, Mary Lazich and Glenn Grothman, sit in extremely red districts and look to have safe leads.) These numbers suggest we have a chance to make five and possibly six recall races highly competitive.

David Weigel–now of Slate--reports on similar trends for Rick Scott and Scott Walker. Rasmussen has Governor Walker hanging in there with a 43% approval rating.  It’s interesting when you get the same results  from a less liberal-affiliated polling company.

Wisconsin Governor Scott Walker won his job last November with 52% of the vote, but his popularity has slipped since then.

A new Rasmussen Reports telephone survey of Likely Wisconsin Voters finds that just 34% Strongly Approve of the job he is doing, while 48% Strongly Disapprove. Overall, including those who somewhat approve or disapprove, the new Republican governor earns positive reviews from 43% and negative reviews from 57% of voters statewide.

In addition to the usual partisan and demographic breakdowns, it’s interesting to note that Walker, now engaged in a budget battle with unionized state workers, receives a total approval rating of 46% from households with private sector union members. However, among households with a public sector union member, only 19% offer their approval. Among all other households in the state, opinion is nearly evenly divided—49% favorable and 51% unfavorable.

It’s also interesting to note that among households with children in the public school system, only 32% approve of the governor’s performance. Sixty-seven percent (67%) disapprove, including 54% who Strongly Disapprove.

Wiegel writes that Democratic strategist believe the blowback will have signficant positive effects for the re-election of Obama come 2012.

I was talking the other day to a Democrat who’d been battle-scarred by the 2010 Florida campaign, in which Democrats lost everything. Everything. Alan Grayson’s career died quickly. Kendrick Meek became a trivia question. One of the people Palin endorsed, Pam Bondi, actually won. And Rick Scott pipped Alex Sink, the most talented statewide Democratic candidate since Lawton Chiles, to become governor.

This Democrat’s spin was that Sink’s loss wasn’t so bad after all. Scott was pissing off too many people — the Orlando-Tampa train he’d killed was popular — and Democrats could win back independents in 2012, saving the state for Barack Obama.

Further evidence of the extremist elements in both the Tea Party and the current incarnation of the Republican party show up in other polls.  A CNN poll shows that most people do not want the government shut down over budget issues.  The folks that object are basically tea party-affiliated.

Nearly six in ten people questioned in the poll say that it would be a bad thing for the government to shut down for a few days because Congress did not pass a new spending bill, with 36 percent saying it would be a good thing for the country. And if a government shutdown lasted a few weeks, that figure would rise to 73 percent.

“But Republicans think a shut down that lasts a few days would be a good thing. And a majority of Tea Party supporters approve of a shutdown even if it lasts several weeks,” says CNN Polling Director Keating Holland. “That puts pressure on House Speaker John Boehner and other GOP leaders to take a step which might hurt their standing with independents as well as some Republicans.”

The survey indicates wide partisan differences on the issue, with only 21 percent of Democrats saying a shutdown for a few days would be a good thing. That figure rises to 35 percent for independent voters, 53 percent for Republicans, and 62 percent for Tea Party supporters.

Couple this with a Gallup poll that shows that Huckabee and Bachmann have the most intense followers in the field of GOP presidential wannabes. There is definitely a crazy side to the Republican Party and it’s showing signs of taking the party into extreme positions supported by very few Americans. I personally can’t imagine voting for either of this people for dog catcher let alone president.  I don’t think they’re qualified to flip hamburgers, frankly.

Former Arkansas Gov. Mike Huckabee leads the field of possible GOP presidential candidates in “positive intensity” among Republicans nationwide with a score of +25 among Republicans who are familiar with him, followed by Rep. Michele Bachmann of Minnesota with a score of +20. Huckabee is recognized by 87% of Republicans, compared with Bachmann’s 52%. A number of other possible Republican presidential candidates trail these two in Positive Intensity Scores, including Sarah Palin, who is the best known of the group.

With these kinds of people rising to the top in party politics of one of the major parties, it’s no wonder we also have an ABC News-WAPO poll that shows Americans are not very confident in their system of government.

Only 26 percent of Americans in a new ABC News/Washington Post poll say they’re optimistic about “our system of government and how well it works,” down 7 points since October to the fewest in surveys dating to 1974. Almost as many, 23 percent, are pessimistic, the closest these measures ever have come. The rest, a record high, are “uncertain” about the system.

The causes are many. Despite a significant advance, more than half still say the economy has not yet begun to recover. And there’s trouble at the pump: Seventy-one percent in this poll, produced for ABC News by Langer Research Associates, report financial hardship as a result of rising gas prices. Forty-four percent call it a “serious” hardship.

People are desperately unhappy with the results of the two party system.  It doesn’t even appear that voting for party gridlock works much any more.   The Republican notion of big government is a white daddy government that restricts women’s rights, worker’s rights, and transfers wealth to the already rich and powerful.  What exactly is the Democratic notion these days?  While this backlash will work to the benefit of the sitting President and the Democratic politicians, will they just ride the backlash or actually articulate and run on some kind of vision for a change?  Let me be more specific.  How about some actions that match those fancy speeches for a change?

We now seem stuck the worst features of the two party system   We try for gridlock but get bugfug crazy from the Republicans.  We try for social justice but the Democratic Party never seems to be able to coalesce around a vision or agenda that does much other than respond to Republicans by caving-in and playing up to party donors.  I’m not sure that I see that changing much given we can’t even get this current President off his historical position of voting present.

The challenges that we’re facing today seem as severe as those we faced during the Bush years.  There’s a melt down in strongman governments in the MENA area, we’ve had two major energy-related disasters, and we’ve still got an economy that’s barely sustaining a recovery with high unemployment.  If there ever was time for leadership and vision from some corner of national politics, it would be now.  Voters keep turning the reigns of government over to the Dubyas, the Walkers, and the Kasichs because they can’t get what they want from Democrats.  They emerge from each party’s rule appalled.  It seems like some one reasonable could take advantage of that situation.  Why do I feel that the Democratic Party will just blow this opportunity away too?

Tuesday Reads

Posted: March 15, 2011 | Author: | Filed under: John Birch Society in Charge, morning reads, Reproductive Rights, Republican presidential politics, right wing hate grouups | Tags: , , , , , , | 72 Comments

Beware the Ides of March!!

Well, things remain in flux. First, Senate Republicans in Wisconsin are still holding the 14 Democrats hostage to their policies and contempt.

Senate Majority Leader Scott Fitzgerald wrote this afternoon in an email to his caucus that Senate Dems remain in contempt of the Senate and will not be allowed to vote in committees despite returning from their out-of-state boycott of the budget repair bill vote.

“They are free to attend hearings, listen to testimony, debate legislation, introduce amendments, and cast votes to signal their support/opposition, but those votes will not count, and will not be recorded,” wrote Fitzgerald, R-Juneau.

Republicans in Kansas are also suggesting some pretty bizarre things.

A legislator said Monday it might be a good idea to control illegal immigration the way the feral hog population has been controlled — with hunters shooting from helicopters.

State Rep. Virgil Peck, R-Tyro, said he was just joking, but that his comment did reflect frustration with the problem of illegal immigration.

Peck made his comment came during a discussion by the House Appropriations Committee on state spending for controlling feral swine.

After one of the committee members talked about a program that uses hunters in helicopters to shoot wild swine, Peck suggested that may be a way to control illegal immigration.

Then, Glenn Beck decided to take Pat Robertson’s place in talking about earthquakes, god, and endtimes.

Discussing the devastation in Japan on his radio program this morning, Glenn Beck lamented that we “can’t see the connections here.”

Beck said that he’s “not saying God is, you know, causing earthquakes,” then clarified that he is “not not saying that, either,” then added: “Whether you call it Gaia, or whether you call it Jesus, there’s a message being sent and that is, ‘hey, you know that stuff we’re doing? Not really working out real well.’ Maybe we should stop doing some of it.”

Think that’s outrageous?  Check out this one from a GOP House member from New Hampshire that at least retired after this comment.

Rep. Martin Harty, a Barrington Republican, has resigned his House seat in the wake of fire he drew for remarks on mental illness and population control.

Harty, who turns 92 this month, came into spotlight last week after telling a voter during a phone call that he thought the best treatment for the mentally ill would be a one-way trip to Siberia.

He also said population growth and mental illness could be controlled with eugenics, a form of genetic engineering commonly associated with Hitler’s Germany.

Kinda makes you wonder what’s wrong with some people in this country doesn’t it?  If this is coming from the country’s decision makers and opinion leaders, I think we’re in a heckuva lotta trouble.  Then there’s this bit of news on the Supreme Court coming from a study co-authored by conservative Court of Appeals Judge Richard Posner.

… the Roberts Court places a huge thumb on the scale in favor of corporate interests. According to the study, the Roberts Court rules in favor of business interests 61 percent of the time, a 15 point spike from the five years before when Chief Justice Roberts joined the Court.

While the Chamber of Commerce has recently tried to downplay the favorable treatment it receives from the Supreme Court, its own top lawyer admitted a few years after Roberts joined the Court that the justices give his client special treatment:

Carter G. Phillips, who often represents the chamber and has argued more Supreme Court cases than any active lawyer in private practice, reflected on its influence. “I know from personal experience that the chamber’s support carries significant weight with the justices,” he wrote. “Except for the solicitor general representing the United States, no single entity has more influence on what cases the Supreme Court decides and how it decides them than the National Chamber Litigation Center.”

Phillips’ confession, and the Posner study’s conclusion, corroborates other data showing the Roberts Court’s favoritism towards corporate interests.

Women are definitely on the losing end of Republican Government overreach. Here’s the latest example from Iowa.

Life can’t get much worse for Christine Taylor. Last month, after an upsetting phone conversation with her estranged husband, Ms. Taylor became light-headed and fell down a flight of stairs in her home. Paramedics rushed to the scene and ultimately declared her healthy. However, since she was pregnant with her third child at the time, Taylor thought it would be best to be seen at the local ER to make sure her fetus was unharmed.

That’s when things got really bad and really crazy. Alone, distraught, and frightened, Taylor confided in the nurse treating her that she hadn’t always been sure she’d wanted this baby, now that she was single and unemployed. She’d considered both adoption and abortion before ultimately deciding to keep the child. The nurse then summoned a doctor, who questioned her further about her thoughts on ending the pregnancy. Next thing Taylor knew, she was being arrested for attempted feticide. Apparently the nurse and doctor thought that Taylor threw herself down the stairs on purpose.

According to Iowa state law, attempted feticide is an trying “to intentionally terminate a human pregnancy, with the knowledge and voluntary consent of the pregnant person, after the end of the second trimester of the pregnancy.” At least 37 states have similar laws. Taylor spent two days in jail before being released. That’s right, a pregnant woman was jailed for admitting to thinking about an abortion at some point early in her pregnancy and then having the audacity to fall down some stairs a couple of months later. Please tell me you find this as horrifying as I do.

With that bit of news, I’d like to recommend something Bostonboomer found yesterday by Chris Hedges: Power Concedes Nothing Without a Demand.

The liberal class is discovering what happens when you tolerate the intolerant. Let hate speech pollute the airways. Let corporations buy up your courts and state and federal legislative bodies. Let the Christian religion be manipulated by charlatans to demonize Muslims, gays and intellectuals, discredit science and become a source of personal enrichment. Let unions wither under corporate assault. Let social services and public education be stripped of funding. Let Wall Street loot the national treasury with impunity. Let sleazy con artists use lies and deception to carry out unethical sting operations on tottering liberal institutions, and you roll out the welcome mat for fascism.

Well, there are some places in the world where people see themselves as altogether in one big struggle against the bad things that happen.  The Japanese are certainly providing some good examples of resilience and human strength in the face of some horrendous disasters.  In the UK,  The Telegraph asks: ‘Why is there no looting in Japan?’

The landscape of parts of Japan looks like the aftermath of World War Two; no industrialised country since then has suffered such a death toll. The one tiny, tiny consolation is the extent to which it shows how humanity can rally round in times of adversity, with heroic British rescue teams joining colleagues from the US and elsewhere to fly out.

And solidarity seems especially strong in Japan itself. Perhaps even more impressive than Japan’s technological power is its social strength, with supermarkets cutting prices and vending machine owners giving out free drinks as people work together to survive. Most noticeably of all, there has been no looting, and I’m not the only one curious about this.

This is quite unusual among human cultures, and it’s unlikely it would be the case in Britain. During the 2007 floods in the West Country abandoned cars were broken into and free packs of bottled water were stolen. There was looting in Chile after the earthquake last year – so much so that troops were sent in; in New Orleans, Hurricane Katrina saw looting on a shocking scale.

Why do some cultures react to disaster by reverting to everyone for himself, but others – especially the Japanese – display altruism even in adversity?

We might ask ourselves the same question.  Why is it that some folks display altruism even in adversity?

What’s on your reading and blogging list today?

Misplaced Blame and Impact

Posted: March 14, 2011 | Author: | Filed under: Bailout Blues, Economy, financial institutions, Global Financial Crisis | Tags: , , | 15 Comments

The blame for the worst recession since the The Great Depression clearly rests on the private sector where millions of bad loans and financial innovations turned peoples homes and investments into casino style gambling games.  The disastrous lack of regulation, accountability, and common sense is still wrecking havoc on the economy today. The lending industry is still at odds with common sense, community well being, and the national interest. Paul Krugman wrote about this today in his NYT op ed using the academy award winning film Inside Job as the cautionary frame. What is evident in all of this fall out is that the people that deserve the blame are still acting abominably and the people they wronged are still getting the worst end of the deal.

What the film didn’t point out, however, is that the crisis has spawned a whole new set of abuses, many of them illegal as well as immoral. And leading political figures are, at long last, showing some outrage. Unfortunately, this outrage is directed, not at banking abuses, but at those trying to hold banks accountable for these abuses.

The immediate flashpoint is a proposed settlement between state attorneys general and the mortgage servicing industry. That settlement is a “shakedown,” says Senator Richard Shelby of Alabama. The money banks would be required to allot to mortgage modification would be “extorted,” declares The Wall Street Journal. And the bankers themselves warn that any action against them would place economic recovery at risk.

All of which goes to confirm that the rich are different from you and me: when they break the law, it’s the prosecutors who find themselves on trial.

To get an idea of what we’re talking about here, look at the complaint filed by Nevada’s attorney general against Bank of America. The complaint charges the bank with luring families into its loan-modification program — supposedly to help them keep their homes — under false pretenses; with giving false information about the program’s requirements (for example, telling them that they had to default on their mortgages before receiving a modification); with stringing families along with promises of action, then “sending foreclosure notices, scheduling auction dates, and even selling consumers’ homes while they waited for decisions”; and, in general, with exploiting the program to enrich itself at those families’ expense.

The end result, the complaint charges, was that “many Nevada consumers continued to make mortgage payments they could not afford, running through their savings, their retirement funds, or their children’s education funds. Additionally, due to Bank of America’s misleading assurances, consumers deferred short-sales and passed on other attempts to mitigate their losses. And they waited anxiously, month after month, calling Bank of America and submitting their paperwork again and again, not knowing whether or when they would lose their homes.”

There are more issues than just the foreclosure one.  Here’s an example of a family fighting to sue BOA for the wrongful death of an elderly man who committed suicide after they recommended investments to him that failed miserably. The family has found out that the man had probably unknowingly signed away the right to sue in the fine print of the investment documents.  I can’t imagine any one recommending a portfolio of risky assets to any one over the age of 50, yet this is exactly what BOA did to Mr. Phillip Grossman.

Philip Grossman saved carefully his whole life, never investing in anything more exotic than certificates of deposit. But in June 2007, his longtime banker at a Bank of America branch in Waltham told him he could do better, without taking more risk, and introduced him to a broker at the bank’s investment arm.

Two years later, Grossman, then a 65-year-old computer consultant, and his wife had lost $400,000 — more than half their savings. In despair in the fall of 2009, Grossman checked into a Woburn motel, left his glasses and watch on the desk in his room, and killed himself.

Stunned by the tragedy, his family tried to sue Bank of America, asserting that the broker invested more aggressively than promised, adding to the steep losses and contributing to Grossman’s suicide. But they soon found out they would not get their day in court: The papers the Grossmans signed to open their account required that any dispute go to a private panel of arbitrators.

“They’ve committed a crime against us, as far as I’m concerned,’’ Grossman’s wife, Gail, said in an interview. “Why do we have to go to arbitration? With other crimes you get a trial and a jury. It just seems very unfair to me.’’

The Grossmans’ case shows how entrenched arbitration has become in the financial industry, demonstrating that even in an extreme case alleging wrongful death, aggrieved clients have no recourse other than a system that critics say favors investment firms. Most investors have no idea that when they open a brokerage account, they give up their right to sue, and must, under a 1987 Supreme Court ruling, take complaints to arbitration.

There are more outrages to share with you.  Think that having a perfect credit score and a huge down payment will get you a loan these days if you’re a consumer?  Think again.  Banks are lending to junk bond quality businesses while denying the best of households basic mortgages. The recovery is not just around the corner for the majority of  US households for many reasons.   Government help has been concentrated at reaching banks and businesses.  This is not translating into improvement for all.

The consumer loan market, particularly housing, remains a challenge for borrowers. Total U.S. consumer credit outstanding was $2.4 trillion in January, or 6.6 percent below its July 2008 level, the Fed said in a March 7 report. Total housing debt has declined by $536 billion since 2008 to $10.1 trillion, Fed data show. The median price of an existing U.S. home has dropped 13 percent since June to $158,800, bringing its decline since July 2006 to 31 percent, according to the Chicago-based National Association of Realtors. About 10.8 million homes were worth less than the debt owed on them in the third quarter, research firm CoreLogic Inc. said in a Dec. 13 report.

By contrast, the least creditworthy corporations have been able to borrow record amounts at the cheapest rates ever. Junk- rated companies sold an unprecedented $287.6 billion in bonds in 2010 and are setting an even faster pace of issuance this year. Claire’s Stores Inc., the costume jewelry retailer that had debt that was almost 10 times its earnings last year, sold $450 million of bonds last month that Moody’s Investors Service gave its third-lowest rating.

There are several other disturbing figures in the Bloomberg article quoted directly above.

The U.S. economy grew at a 2.8 percent annual rate in the fourth quarter, slower than previously calculated, and is forecast to expand 3.2 percent this year, according to the median estimate of 66 economists in a Bloomberg survey.

Household purchases account for about 70 percent of the U.S. economy, making the consumer the single biggest driver of any economic recovery. Those consumers “stumbled at bit” at the start of this year, Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, said in a February note.

While the economy expanded and companies are beginning to spend more, the improvements haven’t driven the nation’s unemployment rate below 8.9 percent for almost two years and the Conference Board’s gauge of consumer confidence is still 37 percent below the level reached in July 2007.

“The 2007-2009 recession period looks different from previous economic cycles,” John McElravey, a bond analyst at Wells Fargo Securities LLC in Charlotte, North Carolina, said in a March 8 report. “Consumer credit outstanding contracted much more sharply than in other periods, and the return to positive growth rates has been relatively slow.”

There are so many things different and bad with this recovery that it is indeed troubling.  Perhaps the most important factor is that government is clearly not helping homeowners, the jobless, and the many families who have lost wealth via the crash in home values and their investments.  The focus of bailouts has been on banks and businesses that have not used the funds to benefit their communities.  Something is clearly wrong here with policy priorities when you’re not focused on the major source of consumption in a consumer-drive economy.

Not only is policy not aimed at the majority of people in the country, the focus in the District is now clearly turning to austerity measures and turning neighbor against neighbor.  I can’t tell you exactly how worried I am that a huge number of households will still be in trouble come the next recession.   Here’s another opinion on that very subject from E.J. Dionne Jr. at WAPO.

A phony metaphor is being used to hijack the nation’s political conversation and skew public policies to benefit better-off Americans and hurt most others.We have an 8.9 percent unemployment rate, yet further measures to spur job creation are off the table. We’re broke, you see. We have a $15 trillion economy, yet we pretend to be an impoverished nation with no room for public investments in our future or efforts to ease the pain of a deep recession on those Americans who didn’t profit from it or cause it in the first place.

As Sen. Al Franken (D-Minn.) pointed out in a little-noticed but powerful speech on the economy in December, “during the past 20 years, 56 percent of all income growth went to the top 1 percent of households. Even more unbelievably, a third of all income growth went to just the top one-tenth of 1 percent.” Some people are definitely not broke, yet we can’t even think about raising their taxes.

By contrast, Franken noted that “when you adjust for inflation, the median household income actually declined over the last decade.” Many of those folks are going broke, yet because “we’re broke,” we’re told we can’t possibly help them.

That’s the new excuse.  We could help Chrysler.  We could help GM.  We could help the financial institutions and Wall Street.  We could invade Iraq and Afghanistan to help them.  We could do all that, but now we’re too broke to help ordinary Americans.  It’s obvious that the financial institutions are doing nothing to improve the situation.  It’s also pretty obvious that Iraq and Afghanistan are money pits.  When do we get the government to quit throwing our money to rich people and businesses?  When do we get them to stop blaming teachers, firefighters, and police offers for taking up too much of the pie?  When do we actually start looking at the real numbers and the real culprits who took all this vast wealth and continue to ensure the rules only benefit the few?

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