Let’s Make a Deal (or not)

Posted: November 12, 2010 | Author: | Filed under: Bailout Blues, Economic Develpment, Global Financial Crisis, Team Obama, U.S. Economy | Tags: , , , | 6 Comments

The U.S. and South Korea have failed to reach an agreement in a trade deal that would have boosted U.S. agriculture exports.  The deal would’ve included concessions to South Korea on automobiles and that was not going over well with domestic automakers like FORD and their related labor unions.  As with all trade arrangements, there are usually winners and losers.  Ranchers and U.S. consumers would’ve been on the winning side of the deal.  The U.S. auto industry and related interests were the potential losers.

Arrangements probably failed due to the tough stance the U.S. is taking on the dollar and foreign exchange pegs these days. No one is happy with QE2 around the world.  We’ll get to that in a minute.  I’m going to quote from the WSJ on this so you need to realize that what’s written here is very pro-free trade.  What was being negotiated at the moment was removal of some trade barriers on both sides.  Political consensus here was that Obama is trying to look more “pro-business”.  Part of South Korea’s problems, oddly enough, is that they are ‘too green’ for America’s stuff. Can you imagine a Democratic president trying to get a country to be less environmental friendly?

One stumbling block was Korea’s refusal to change a provision in the 2007 pact that provided an immediate end to a 2.5% tariff the U.S. levies on imports of Korean cars, said House Ways and Means Committee Chairman Sander Levin (D., Mich.). The U.S. wanted the tariff reduced gradually, while Korea eliminates safety and environmental rules that U.S. auto makers, led by Ford, said help keep Korea the world’s most closed car market. The effect of reducing the U.S. tariff more slowly likely wouldn’t be large because South Korea’s Hyundai Motor Co. already gets around it on more than half of the cars it sells in the U.S., by making them in Alabama and Georgia.

Compounding the stalemate, Mr. Levin said, were U.S. concerns that Korea’s proposed system for settling disputes wasn’t likely to work.

The U.S. also wants Korea gradually to drop its ban on imports of U.S. beef from older cattle, which began after the U.S. had a case of mad-cow disease seven years ago. Previously thought the easier of the two issues, it is a hot button politically for Korea and prompted a walkout by Korean negotiators.

In the end, the parties ran out of time. U.S. Trade Representative Ron Kirk said, “We won’t be driven by artificial deadlines,” though it was Mr. Obama who set the G-20 deadline.

The president alluded to the political pressures. “If we rush something that then can’t garner popular support, that’s going to be a problem,” said Mr. Obama, who had criticized the moribund 2007 Korea pact when he was a candidate. “We think we can make the case, but we want to make sure that that case is airtight.”

So, if you want the White House explanation, here’s Austan Goolsbee in a white house white board moment. I’m not sure what it says when the head of the President’s economic advice team has to give us all lectures, but any way, here’s the deal via Austan.

So, the G20 thing seems to be an exercise in every one going their own way.  No one likes the hot money issue or the weakening dollar.  So much for cooperation.  Guess the only thing we’re exporting  these days are financial bubbles.

The U.S. Federal Reserve decision last week to pump $600 billion into world’s biggest economy has stolen the spotlight away from China’s currency. Brazilian Finance Minister Guido Mantega said today that the Fed’s move may inflate commodities prices and proposed the world move away from using the dollar as the main reserve currency. Former Chinese central bank governor Dai Xianglong this week faulted the U.S. for adopting policies without regard for the dollar’s global role.

The policy fissures and concern countries may react with currency devaluations and capital controls underscore how the G-20 unity displayed during the financial crisis has given way to national divisions as members chart their own recovery path.

“The last thing a developing economy wants is for that liquidity to distort their asset markets and create a destabilizing bubble,” Stephen Roach, Morgan Stanley’s nonexecutive Asia chairman, told Bloomberg Television in an interview yesterday. “The process is not going to work if they don’t come up with a multilateral solution.”

If you want to read how the QE2 could possibly work and if it will be scaled up, I suggest going over to Tim Duy’s FedWatch for a wonky and some what long analysis. Oh, and there are plenty of those nifty graphs that I always love in the piece about the recovery.  He’s going with the blowing bubbles is good narrative.  Interesting.  Duy says the FED has no choice because the Federal Government is so out of it on Fiscal Policy.  Even more interesting and sadly true.

Flooding the market with money is dangerous business.  It risks distorting prices and capital allocations.  We simply don’t know where the money will wash up.  I know that is in vogue to believe there is a nice, obvious story that links an increase in the money supply to an increase in nominal GDP, but that only works on paper.  In the real world, the paths between money and output and prices are complicated.  The ultimate composition of aggregate demand matters.  It matters a lot – distortions have consequences.  Warsh’s risks amount to a laundry list of the possible distortions that might occur as the result of ongoing quantitative easing.  And he clearly takes those risks seriously.

It makes me think that I haven’t been taking those risks seriously enough.  But when monetary policy is the only game in town, what choice do you have?  You do what you can up to a point…but then you throw it back to Congress and say “you take responsibility for the mess you created by abdicating your role in crafting long run, stabilizing macroeconomic policies.”  Warsh has set the stage for doing exactly that.

Of course, seriously, if we really have to throw this back to Congress, we are absolutely done for.  Cooked.  Toast.  Somebody remember to tell the last guy to turn off the lights on his way out.  Better to take our chances with the next bubble.

Aiyee … I’m about reading to move my money into alligator belly futures.  At least that makes a good gumbo if you fail to get out in time.

Friday Reads

Posted: November 12, 2010 | Author: | Filed under: just because, morning reads | Tags: , , , , , | 59 Comments

Anji Allen "Books, Cup and Flowers"

Good Morning!!!

Well, the on and off again relationship between The Daily Beast and Newsweek is on again. They’ve got more issues with mergers than a couple of teenagers.

The New York Post‘s Keith Kelly tweets tonight that Mr. Harman, reached by telephone, said: “It’s not done yet.” And Advertising Agereports that while the sides are “close to finalizing a deal,” the announcement is only “possible” for Friday morning. With two powerful egos at a negotiating table, no deal is final until it is final. But Mr. Harman and Mr. Diller have broken through on the major issues between them, according to one source, and a deal is all but complete.

If you ever need proof of the corporate agenda and money impacting policy positions within the Beltway, this is it.  WAPO has an article up revealing how many of the Cat Food Commission staffers were actually paid by outside entities. Wanna guess what types of companies contributed employees to the effort?  How about those that are after our social security dollars to fund their casino operations?

Kennelly and other liberal-leaning critics say they are particularly troubled by the influence of Peterson, a billionaire and former investment banker who began a $6 million campaign this week urging lawmakers to cut the deficit. Peterson, co-founder of the Blackstone Group investment fund, paid for a series of town hall meetings this year that included participation by deficit commission members. He also funds the Fiscal Times, a digital news organization that focuses on federal debt issues.

Best blue ribbon panel money can buy!!!

A pentagon survey evidently shows that dropping DADT will not cause wartime strife.  So what the heck is Obama waiting for?  Just sign an executive order and get it over with already!  I’ve had it with this dilly dallying around with discrimination.

The findings summarized in a lengthy report that the Pentagon is preparing to send to President Obama about the potential effects of repealing the military’s “don’t ask, don’t tell” policy have been relayed to The Washington Post ahead of the game, and from the (secondhand) look of it, the policy’s days may well be numbered if the Department of Defense heeds those findings

Okay, I’m back on currency war topics again.  This is from Nouriel Roubini on ‘New Rules for Hot Money’ at Project Syndicate.   This is the money that will cross borders in search of higher returns from those developing markets that are in good shape.  I think you’ll remember me telling you about 9 months ago that that was my investment strategy so I’ll just put this in as some kind of  notification to you that I have money in this strategy.  It’s not a lot of money, but, hey it’s hot!!!  (And, I’ve done real well recently so I’m probably going to cut and run shortly too, so don’t take this as any indication of me saying do this, please! )I’m going to excerpt Roubini’s explanation. It’s also one of the reasons that the dollar weakens and other currencies appreciate because if you want to invest in bonds from Thailand, you don’t use dollars, you use the Baht.  So, high demand for baht, low demand for dollars, exchange rates for baht are the price of the baht and so the baht gets more expensive.  The interesting points this explanation are on what policy makers can do in response to this phenomenon.   Also, there’s a point you have to separate the potential for a bubble vs. actual appreciation.

Capital flows to emerging-market economies have been on a boom-bust merry-go-round for decades. In the past year, the world has seen another boom, with a tsunami of capital, portfolio equity, and fixed-income investments surging into emerging-market countries perceived as having strong macroeconomic, policy, and financial fundamentals.

Such inflows are driven in part by short-term cyclical factors (interest-rate differentials and a wall of liquidity chasing higher-yielding assets as zero policy rates and more quantitative easing reduce opportunities in the sluggish advanced economies). But longer-term secular factors also play a role. These include emerging markets’ long-term growth differentials relative to advanced economies; investors’ greater willingness to diversify beyond their home markets; and the expectation of long-term nominal and real appreciation of emerging-market currencies.

There’s some important analysis up at the WSJ by economist Robert E Hall who is one of the folks that actually dates the start and end of recessions and booms.  He’s basically talking about how dysfunctional monetary policy is now because we’re in a liquidity trap.

In a paper presented Thursday at a Federal Reserve Bank of Atlanta conference, Mr. Hall calculates that loose credit earlier in this decade resulted in consumers buying 14% more long-lasting items — from cars and dishwashers to houses — than they would have if credit conditions had remained as they were in the previous decade.

The recession was marked by those overextended households cutting spending and saving more in the face of hard times. The problem now is that the normal tool used to revive consumer spending and hiring — cutting interest rates well below the inflation rate — isn’t available because rates are nearly at zero. So unemployment has remained stuck at a high level, currently 9.6%.

Mr. Hall, who also serves as chairman of the National Bureau of Economic Research’s Business Cycle Dating Committee — the group that officially pronounces the start-date of recessions and recoveries — concludes that the only way to get the job market growing is to institute monetary policies “that emulate the effect of low real rates — making current purchasing cheaper than future.” That should be music to the ears of many at the Fed, which just launched a controversial program to buy government bonds aimed at getting the economy growing faster.

Yves over at Naked Capitalism has found more evidence of BOA fraudulent foreclosures. This time they’re pulling stuff in the state of Kentucky. We’ll just have to see what newly minted Senator Rand Paul says about that, won’t we?

The bank position so far has been that problems so far are mere mistakes and “sloppiness”. But as we’ve described repeatedly, the problems with securitzations run much deeper than that. It appears that the parties to the deal often failed to take the time consuming steps necessary to convey the note (the borrower IOU) to the trust as stipulated in the contract governing the deal, the pooling and servicing agreement. The PSA required that each note in the deal had to be signed by multiple intermediary parties before it got to its supposed final resting place, a trust. And that had to take place by closing or at most 90 days thereafter.

Many foreclosures show this process was not observed on a widespread basis: the notes were assigned (as in transferred) to the trust right before closing, a violation of the PSA, the New York trust statutes that govern virtually all mortgage securitization trusts, and IRS rules for these trusts (REMIC). When foreclosure defense attorneys started contesting these assignments, suddenly a new ruse started to show up: allonges, which are sheets of paper that contained the needed endorsements, would magically appear out of nowhere. The problem is that an allonge is supposed to be used only when there is no space left on the note for endorsements, including margins and the reverse side, and when it is used, it is supposed to be so firmly attached to the original as to be inseparable. But these “ta da” allonges were always somehow discovered at the custodian, quite separate from the note.

How long can the Justice Department turn a blind eye to these things?  There’s too many states involved and too many loans for it not to be a systemic procedure.  Follow the details over there and I think you’ll see the evidence is strong.

Speaking of corporate malfeasance, have you read about GOOGLE recently? You might want to find out if the company’s been spying on you, because it appears they’re doing so as a matter of course.

Ardent Google critic Consumer Watchdog has called on Congress to hold hearings on a major privacy breach by the Internet search engine giant, and insists that CEO Eric Schmidt should come to Washington to testify.

The group says Congress should get involved even though the Federal Communications Commission (FCC) is already investigating.

That probe is important, but Congress is “the best venue to get a full explanation,” the group said Thursday in a letter to House lawmakers on the House Energy and Commerce Committee, which has jurisdiction over Google.

Google admitted last month that it collected and stored private user data, including passwords and e-mails, from Wi-Fi networks. Critics have termed the incident Google’s “Wi-Spy” breach.

Seems you don’t have to look over your shoulder any more to see if some one is following you.  They’re doing it under your nose and fingers.

Glenn Greenwald continues to believe the Terrorism is being used an excuse to erode freedom of speech.  You can read his latest at Salon.  More importantly, I found a link to Justin Elliot’s latest on Obama and how he’s escalating the secret war in Yemen. Whoa!!!

The Obama Administration has U.S. military trainers on the ground in Yemen and has already launched an attack and possibly multiple attacks in the country, drawing relatively little public attention and virtually no debate in Congress. Analysts and news reports suggest that the administration is now poised to escalate the secret war in Yemen, possibly by launching drone attacks targeting suspected terrorists.

The attention of the U.S. media briefly re-centered on Yemen late last month after explosives originating from the Gulf nation were found on two cargo planes in Britain and Dubai. The Obama Administration has fingered the Yemen-based group Al Qaeda in the Arabian Peninsula (AQAP) as responsible for the failed attempt. (AQAP also claimed responsibility.)  This is the same group that claimed responsibility for the failed attempt by Nigerian national Umar Farouk Abdulmutallab to blow up a Detroit-bound plane on Christmas Day 2009.

But less attention has been paid to U.S. attacks on targets in Yemen — of which there have been at least two since 2002 — and the U.S. military role in training Yemeni forces as well as helping them carry out air strikes.

And you thought last stop was Vietnam, Iraq, Afghanistan?  Yup, way to go PEACE candidate!

Alright, that’s enough from me.  I’m going through my recipes to look for some good New Orleans recipes to share on Treats thread tonight.   I’m giving you some warning so you’ll be prepared to share any that you’ve got that are just plain good ol’ down home cookin’.

What’s on your reading and blogging list today?

Survival of the Richest

Posted: November 11, 2010 | Author: | Filed under: Bailout Blues, Global Financial Crisis, Human Rights, Surreality, The Bonus Class, The Great Recession | Tags: | 41 Comments

In the natural world, the weakest generally don’t survive unless they are part of a highly evolved species.  The lessons of basic evolution are fairly simple, you either develop something that gives you a competitive advantage over those who wish to make a meal of you, or you and your offspring have a very brief and brutal existence.

Humankind evolved into something beyond a herd animal by developing tools and social contracts. Through trade, language, and invention, our evolutionary history has shown that competitive advantage does not have to involve size, brute force, speed, or trickery like camouflage.   Dogs evolved into a smart and numerous population by being genetically flexible.  Indeed, the more advanced beings tend towards flexibility and social interaction.  Nurturing, passing on survival skills, specializing, and adapting are all important survival skills for more highly evolved beings.  Many natural scientists now study the importance of how these species treat their youngest and the oldest, since the young are portents of the future and the elderly are the libraries of past knowledge and skills. Specialization allows creatures other than those with superior brute force to be contributors.  We wouldn’t have The David or knowledge of Gravitational Singularity if we evolved on pure brute force.  Evolutionary Biology learns a lot about a species by the way it treats its weakest, its young, and its elderly.

What amazes me most about the Cat Food Commission report is that it is so Republican that you wonder if anyone Democratic had anything to do with its inception or results. But of course, it was chartered by a Democratic President and co-chaired by a Democratic man.  For a group of Darwin denying theists,  Republicans believe and adhere to survival of the fittest in the most strict terms and this report wreaks of that view.  The winners of the moment get all the spoils, even if this is a short-sighted and factually-challenged view of reality.  Their ‘masters of the universe’ comic book world is everything that nature does not reward in the extreme long run.  It is inflexible and relies on brute force.  Their reality gives a species a very short and brutal life in the scheme of things and assigns the animal the limited roles of predator and prey. To the Cat Food Commission, the  majority of us are mere prey.

The draft from that dreadful commission came out yesterday and you can read the entire thing here at the NYT.  We knew from the moment the Simpson theatrics began that nothing good was going to come out of this effort.  Simpson put Social Security on the agenda immediately which was completely outside a deficit commission’s sphere.  President Obama did nothing to reel them back.  Simpson only got more theatrical and ill-mannered.  The commission itself could only get worse.

The draft–which is all they can achieve at the moment–suggests upending the social and political contracts made between the US government and the people in ways that I would never have thought possible.  It’s as if every third rail of politics is put to a match.  It was announced as a draft with these big bold red letters that say Do Not Cite as if there’s any hope left that we’ll join the rest of the developed and industrialized nations in realizing that we can choose our priorities differently.  It is an announcement to the rest of the world that we, the American Empire, choose to be so exceptional that we’ll do so to our extinction.  The rest of you just go ahead and cooperate and share, while we ensure the survival of the few over the existence of the many.   No one makes Spock’s choice.  We all go down with the ship and  an Ayn Rand third finger salute.

I read this draft and realize how co-opted we are by conservative ideology just as we are co-opted by religion over reason.  This is a nation that would rather believe than realize. The thing reads like a Republican manifesto.  It contains spending cuts in nearly everything imaginable while still making that fairy tale suggestion that if we overhaul the tax system and lower marginal tax cuts, the wealth will just trickle on down.

One of the major suggestions is to revisit the huge tax break given to mortgage holders on their first and second homes.   While it is worthwhile to review the usefulness of this deduction as blank check, the commission questions its entire existence.  I’ve always wondered what the deal is with giving tax breaks for a second home or a boat.  I’ve also wondered why we should give a huge tax break to people living in McMansions.  However, for ordinary people, this deduction leads to wealth building and security.  Perhaps rather than tearing down the entire thing, they should’ve given some consideration to making it something akin to local homestead exemptions?  But, this would be too compassionate and probably too collectivist for our masters of the universe.  Why can’t they just allow destructibility up to say, the average national price of a home? No, no, because their views of the world say that only corporations get get deductions.  People have to make do with making do. Masters of the Universe don’t have to compete because they are special.  Special treatment for them is something other than a handout or a hand up.

It seems like the commission set out to make radical suggestions.  Maybe it’s to make some of the worst portions of it more palatable if they can’t get the entire thing pushed on to some willing Congressional sponsors?   Part of the problem we have now in our struggling economy is those balanced budget amendments passed by states allowing them to spend crazily when tax revenues are coming in–when government spending should be restrained–while telling states to adopt austere budgets when their economies need a government spending boost.  What’s with these inflexible spending quotas rather than adopting rules that reflect the state of the economy?

You can see some of this worst of this obsession with strict guidelines by reading some analysis by Ezra Klein at WAPO.  I can’t imagine how they’re going to deal with caps like this if we do have a serious national threat like an invading army at our borders. Right now, we’re spending way too much money drone bombing Bedouins in caves. Talk about your spending priorities.

The co-chairs freeze 2012’s discretionary spending at 2010’s levels — and then start cutting it back further. By 2015, they project discretionary spending will be more than $200 billion less than the president’s budget currently envisions. They raise taxes, but rather unexpectedly, cap the revenues the tax system can generate at 21 percent of GDP. They also offer a number of options for tax reform, including one that eliminates all tax expenditures (including the mortgage-interest deduction, the exclusion for employer-based health care, and more) and brings the top rate down to 26 percent. Social Security comes in for both benefit cuts and tax increases — though there are substantially more of the former than the latter. There are a number of Medicare reforms. The co-chairs project that the deficit will fall to 1.6 percent of GDP by 2020 if the recommendations are implemented. The vast majority of those savings come from cuts in spending. Tax increases are a relatively minor contributor.

The commission definitely overstepped its charter in many ways.  The biggest overstep was to make suggestions on Social Security, which technically isn’t part of the general budget and is funded and governed off-budget and supposedly away from political hacks.  The recommendations for Social Security are shocking.  Again, I have to say that Social Security is not an entitlement.  It is a benefit program that we pay for through working.  To see it perpetually treated as some kind of social welfare scheme appalls me.

Here are a few blurbs from Fox News on the proposals dealing with Social Security.  They seem most interested in it because they support tearing the program to shreds.  It’s demise has been the holy grail of the right wing of Republican Party since its inception during the New Deal.  For some reason, you can buy old age benefits from a insurance brokering shitmonger and it’s just all in a day’s work.  If you let the government offer a lower cost alternative,  it’s communism in our midst.

The co-chairmen of the panel appointed by President Obama to cut the U.S. deficit recommend raising the retirement age to 68. It is currently 67 years for retirees to receive full benefits. The panel leaders also propose reducing the annual cost-of-living increases in Social Security.

The increase to age 68 would be implemented by 2050 and then would increase again to 69 by 2075. A “hardship exception” would be provided for certain occupations where older retirement would be unrealistic.

This “hardship exception” is a divide and conquer strategy if I’ve ever seen one.  It pits those of us that rely on social security for retirement against each other.  I see nothing but a series of political fights erupting over this if any one dares bring it to the legislative floor.  It is telling the dogs to fight for the scraps on the floor rather than going for the banquet on their master’s table.

There are a few other things in that are within the scope of the commission’s charter.  Some of them seem tucked in there as an after thought rather than central to a serious discussion on what should be funded and what should be defunded.

According to a source who spoke to Fox News, the 18-member panel led by former Wyoming Republican Sen. Alan Simpson and former Clinton Chief of Staff Erskine Bowles, also may propose reducing the base rate on corporate taxes, phasing in spending cuts over time, reducing foreign aid by $4.6 billion, freezing federal salaries for three years and banning congressional earmarks. It is unclear how the commissioners would define a congressional earmark.

The proposal would also set a tough target for curbing the growth of Medicare. And it recommends looking at eliminating popular tax breaks, such as mortgage interest deduction. The plan also calls for cuts in farm subsidies and the Pentagon’s budget.

Let me just say this, foreign aid is less than 1 percent of our total budget outlay. It’s a pittance.  These kinds of things can only be seen in conservative dog whistle terms.  It makes me wonder exactly how far these folks are asking congress to go to appease Republicans because this can only be described as a plan tailor made for Republican talking points.

Again, I worry that something wasn’t done to narrow the scope of this motley crew way before this report came due.  It says something about the man in charge.  I’ll leave it to you to decide exactly what because my plan at this moment is to go further into the details and ferret out what remains of our country’s future.

And, just where are the Democratic politicians?  If you want some suggestions on this, just go read Black Agenda Report. Editor Bruce Dixon has his own theory.

The masters of corporate media proclaim that their raid on social security, is a done deal. “Entitlements,” their code word for Medicare, Medicaid and Social Security, will be cut in the lame duck session of Congress, with Democratic president Barack Obama taking the lead. Though the outlines of this raid have been clear for months, what passes for black America’s political leadership class have been silent. As far as we know, they have not been ordered to shut up. They have silenced themselves, in abject deference to the corporate black Democrat in the White House.

It took a Republican Richard Nixon to open relations with China in the seventies. It took Democrat Bill Clinton to impose draconian cuts in welfare and end college courses for prisoners in the nineties. And today, only a black Democratic president can sufficiently disarm Democrats, only a black Democrat can demobilize the black polity completely enough for the raid on “entitlements” to be successful.

The Cat Food Commission Weighs In

Posted: November 10, 2010 | Author: | Filed under: Team Obama, U.S. Economy | 51 Comments

I’m going to read more about this in the next few days and I’ll write what I can glean from it when I do.  Both of my daughters are visiting today so I’m not able to sit down and look things over.

Just wanted to pass on some links and comments coming from the President’s Panel on Spending.  It looks like a mixed bag on the surface.  Here’s some details from the NYT. Surprise! Surprise!  Social Security is ON the table and cuts are suggested.

The plan would reduce projected Social Security benefits to most retirees in later decades — low-income people would get higher benefits — and slowly raise the retirement age for full benefits to 69 from 67, with a “hardship exemption” for people who physically cannot work past 62. And it would subject higher levels of income to payroll taxes, to ensure Social Security’s solvency for the next 75 years.

The plan would reduce Social Security benefits to most future retirees — low-income people would get a higher benefit — and it would subject higher levels of income to payroll taxes to ensure Social Security’s solvency for at least the next 75 years.

But the plan would not count any savings from Social Security toward meeting the overall deficit-reduction goal set by Mr. Obama, reflecting the chairmen’s sensitivity to liberal critics who have complained that Social Security should be fixed only for its own sake, not to balance the nation’s books.

Most appalling is the plan calls for taxes cuts. Here’s Krugman’s take on that.

OK, let’s say goodbye to the deficit commission. If you’re sincerely worried about the US fiscal future — and there’s good reason to be — you don’t propose a plan that involves large cuts in income taxes. Even if those cuts are offset by supposed elimination of tax breaks elsewhere, balancing the budget is hard enough without giving out a lot of goodies — goodies that fairly obviously, even without having the details, would go largely to the very affluent.

I mean, what’s this about? There is no — zero — evidence that income taxes at current rates are an important drag on growth.

The more I read, the more I can’t believe that this was a commission put together by a Democratic President.  It’s horrid!  Mankiw (Bush economist) thinks it’s great.  DeLong joins Krugman with a big thumbs down.  DeLong’s headline says it all:   Yes, the Entitlement Commission Was an Unforced Error by the Obama Administration.  Here’s some random comments as he kept reading the abomination.

At the time I asked why you would take a budget arsonist like Alan Simpson and give him a Fire Chief hat. I never got a good answer.

…

Oh my God! Ration city, here we come!

What clowns vetted this thing?

…

A 23% top marginal tax rate?

Hoo boy!

TPM-DC calls their presser “eye popping”.

Their recommendations are more or less a list of the third-rail issues of American politics, including cuts in the number of federal workers; increasing the costs of participating in veterans and military health care systems; increasing the age of Social Security eligibility; and major cuts in defense and foreign policy spending. They also encompass a range of tax system reforms that have been floated by many in Washington for years to little effect, including funding tax rates reductions by eliminating many beloved credits and deductions.

We don’t have a two party system any more.  We have Republicans and Theocratic Republicans.

Who can come along and save us from people like these?

I’ve got some more updates from the currency wars and this thing to plow through.  I’ll start more things tomorrow!!! Promise!!!

——————————————————————————————

Boston Boomer here with some more reactions to the Catfood Commission proposals:

Jane Hamsher has a quote from Richard Trumka, president of the AFL-CIO:

The chairmen of the Deficit Commission just told working Americans to ‘Drop Dead.’ Especially in these tough economic times, it is unconscionable to be proposing cuts to the critical economic lifelines for working people, Social Security and Medicare.

Some people are saying this is plan is just a “starting point.” Let me be clear, it is not.

This deficit talk reeks of rank hypocrisy: The very people who want to slash Social Security and Medicare spent this week clamoring for more unpaid Bush tax cuts for millionaires.

What we need to be focusing on now is the jobs deficit. Working families already paid for Wall Street’s party that tanked our economy. If we actually want to address our economic problems, we need to end tax breaks that send American jobs overseas and invest in creating jobs by rebuilding our crumbling infrastructure and green technologies.

The Hill talked to Bernie Sanders and other liberals

“The Simpson-Bowles deficit reduction plan is extremely disappointing and something that should be vigorously opposed by the American people,” Sanders said in a statement.

Sanders has been among a group of congressional liberals who have threatened to defeat the commission’s recommendations if it curtails Social Security benefits in any way. Sanders has said of the commission’s recommendations that Congress would “vote it down” if it touched on Social Security, and Rep. Raúl Grijalva (D-Ariz.), joined by 136 other House Democrats, has written to similarly warn the commission.

The proposals released on Wednesday, charged Grijalva, co-chairman of the Congressional Progressive Caucus, would only favor the wealthy.

“The path this plan would set is not good for the public. Congress should be having a realistic, productive conversation right now about how to reduce our budget deficit and maintain a secure retirement system for those who have earned it,” he said in a statement. “Instead, we’re debating a proposal from a commission dedicated to cutting crucial social programs and reducing corporate and upper-income taxes at the same time. This is not a recipe for a healthier American economy.”

We need to keep in mind that the co-chairs do not have support from the rest of the commission for these shock doctrine proposals. They also have no power to enact their sick proposals unless the President and Congress support them.

Wednesday Reads

Posted: November 10, 2010 | Author: | Filed under: morning reads | Tags: , , , , , , , , , , | 29 Comments
Good Morning!!!

The infighting for Democratic party leadership positions is getting heated.  The Hill highlights the struggle between Clyburn and Hoyer for minority whip status.  Clyburn is calling shennanigans on Hoyer but both insist the squabble doesn’t signal a party split.

Clyburn, currently the majority whip, said Majority Leader Hoyer’s strategy of releasing the names of his supporters is threatening a process that is historically “about respecting and honoring” fellow Democrats.

“This is not about playing the numbers game,” Clyburn told The Hill outside Washington’s Newseum when asked about his whip count . “This is about respecting and honoring the members of our caucus in such a way that they will be comfortable with the process.

“I don’t see how you maintain a comfort level for all of our members by rolling out these names. I don’t think it does the process any real good. I’ve never done it; I’m not going to do it.”

It must be getting bad since CNN reported a letter by some congress critters suggesting that a delayed leadership election might be in the best interest of the upcoming lame duck session. A copy of the letter is available at the link.

Reps. Marcy Kaptur (D- Ohio) and Peter Defazio (D-Oregon) say in the letter that the “historic results” of the Democrat’s 60-seat loss in the House is one reason to push back leadership selection.

The letter comes as the soon-to-be former House Democratic majority leaders are embroiled in a controversy over who will lead the Democrats when the House changes to Republican hands in January.

Defazio is a known critic of the Democratic leadership and has vocalized his opposition to House Speaker Nancy Pelosi (D- California) remaining in a leadership role. Kaptur has occasionally broken with leadership, but her spokesman told CNN that Kaptur’s request to delay the elections is not about Pelosi, but about giving Democratic members some time to return to Washington and discuss future moves for all leadership slots before any decisions are made.

Meanwhile the Republicans–despite a good election year– are still trying to get rid of Michael Steele.  Well, that’s if you believe the NYT.

So far, the effort has been tentative, with Mr. Steele’s most ardent opponents working behind the scenes to persuade an alternative to run against him — fearful that any overt moves will create a backlash in Mr. Steele’s favor among those committee members who tend to view the establishment in Washington with suspicion.

One man leading the effort is a Mississippi Republican Party committeeman, Henry Barbour, who is a nephew of Gov. Haley Barbour of Mississippi — a former chairman of the Republican National Committee, himself. Governor Barbour is said by people involved in the discussions to be among those eager to see a change at the top of the party and recently criticized party fund-raising under Mr. Steele.

Officials close to the presumed new House speaker, Representative John A. Boehner of Ohio, and the Senate minority leader, Senator Mitch McConnell of Kentucky, said that both men would prefer a new chairman as well, but that they were also resigned to Mr. Steele’s continued leadership should no clear alternative emerge to defeat him.

In an interview Tuesday night, Henry Barbour said, “I like Mike Steele, and I’ve worked hard to support him as chairman.” But, he added, “I do think we have to make a change, and I have actively talked to some other members in the last week or so and encouraged a few of them to consider running.”

The CEO of Cigna doesn’t think that repealing the U.S. Health Reform law is a worthwhile endeavor.  What exactly does that say?  There’s a lot of talk about how the industry is gearing up for the changes already and the trouble that any additional major changes would cost.  Is this why some GOPers are standing down from their earlier threats to move for repeal?  Or, is it some other industry reason?  This is from Reuters.

“I don’t think it’s in our society’s best interest to expend energy in repealing the law,” David Cordani told the Reuters Health Summit in New York. “Our country expended over a year of sweat equity around the formation of it.”

Debate over the law, passed in March, has reignited after Republican gains in last week’s congressional election. The party promised to overturn the overhaul, but some leaders have backed off, saying they would target specific changes and funding.

There’s a great blog entry by EmptyWheel at FDL about the DOJ decision that basically infers its’ okay to cover up torture and destroy the evidence if you’re the CIA and it’s in the name of terrorism.  You can read how no criminal charges will be sought against the CIA at the NYT. Then, go read the the FDL blog piece.  Why is it even called the Department of JUSTICE any more?

Of course no one will be charged for destroying the evidence of torture! Our country has spun so far beyond holding the criminals who run our country accountable that even the notion of accountability for torture was becoming quaint and musty while we waited and screamed for some kind of acknowledgment that Durham had let the statute of limitations on the torture tape destruction expire. I doubt they would have even marked the moment–yet another criminal investigation of the Bush Administration ending in nothing–it if weren’t for the big stink bmaz has been making. Well, maybe that’s not right–after all, Bob Bennett was bound to do a very public victory lap, because that’s what he’s paid for.

The investigation continues, DOJ tells us, into obstruction of the Durham investigation itself. Maybe they think they’ve caught someone like Porter Goss in a lie. But at this point, that almost seems like a nice story the prosecutors are telling themselves so they can believe they’re still prosecutors, so they can believe we still have rule of law in this country.

This inquiry started long before Obama started looking forward, not backward. It started before the White House allowed the Chief of Staff to override the Attorney General on Gitmo and torture. It started before we found out that someone had destroyed many of the torture documents at DOJ–only to find no one at DOJ cared. It started before the Obama DOJ made up silly reasons why Americans couldn’t see what the Vice President had to say about ordering the leak of a CIA officer’s identity. It started before the Obama White House kept invoking State Secrets to cover up Bush’s crimes, from illegal wiretapping, to kidnapping, to torture. It started at a time when we naively believed that Change might include putting the legal abuses of the past behind us.

This inquiry started before the Obama Administration assumed the right to kill American citizens with no due process–all the while invoking State Secrets to hide that, too.

Explain to me again how this a change from the Dubya/Cheney years?  You can read the WAPO take here. I swear, the more I read about some of what’s not happening with the worst abuses of the Dubya/Cheney years, the more I get convinced we’re just in their third term.

David Leonhardt at Economix is calling the recent gold highs as not so high as you think.  Leonhardt says that most of the gold quotes are in nominal and not real terms (i.e. adjusted for inflation over time).  He does the math so you don’t have to.

Gold is at a record only if you fail to adjust for inflation. And you should almost always adjust for inflation. Otherwise, you end up with a series of meaningless records — Gold reaches record high! Oil reaches record high! Lettuce reaches record high! — that depend on the fact that a dollar in 2010 does not have the same value as a dollar did in, say, 1980.

More than a month ago, Ryan Chittum of The Columbia Journalism Review noticed the epidemic of supposed gold records and urged those of us in the media to stop. As he explained, the actual record was set 30 years ago, when the price of gold, in today’s dollars, hit $2,318 — or 65 percent higher than it closed on Monday.

This isn’t simply a question of math. Anyone who says gold is at a record high (or who said oil was several years ago) is getting the story wrong. Why? Because $10 today is not more valuable than $9 a few decades ago. Claiming otherwise is tantamount to saying that 10 rupees is more valuable than $9 because 10 is a bigger number than 9.

Getting information out of any one responsible for the BP Oil Gusher is not quite an act of Congress, but almost.  The EPA had to subpoena Halliburton to get that data on the “fracking” chemicals. And no, that’s not my way of avoiding the cuss word, there actually is something called “fracking” chemicals.  The story is on HuffPo.

The Environmental Protection Agency subpoenaed energy giant Halliburton Tuesday, seeking a description of the chemical components used in a drilling technique called hydraulic fracturing.

The EPA said it issued the subpoena after Texas-based Halliburton refused to voluntarily disclose the chemicals used in the controversial drilling practice, also known as “fracking.” Halliburton was the only one of nine major energy companies that refused the EPA’s request.

The agency said the information is important to its study of fracking, in which crews inject millions of gallons of water, mixed with sand and chemicals underground to force open channels in sand and rock formations so oil and natural gas will flow.

The EPA is studying whether the practice affects drinking water and the public health.

Now, if we could only get our fracking checks down here.

“There continue to be obvious deficiencies with the claims system,” said Louisiana Department of Children and Family Services Secretary Ruth Johnson, who, along with the Division of Administration, is overseeing the state’s role in the oil spill claims process. “An emergency payment should not take six months to process. For people waiting on those payments, the six month delay has moved from an emergency status, to one of survival. Although the Gulf Coast Claims Facility’s (GCCF) claims system is an improvement over BP’s, the state believes that claims need to be processed faster, a priority scale be implemented and baseline compensation models used for claimants who can prove their profession but not their income.”

Since Feinberg took over from BP processing oil spill claims, the GCCF has paid out more than $1.6 billion, $612 million of that in Louisiana. However, despite that large figure, only 23 percent of claims filed in Louisiana have been approved for payment

[MABlue here] You’ve probably all heard that George W. Bush has released a Mt Vesuvius-size of dog droppings an autobiography. Some people have been documenting the absurdity. Here are a couple of must-read:

The UK Guardian has a really good play-by-play of the book release, along with great comments.
George Bush’s memoirs published – as it happened

Professor Stephen Walt went through “Decision Points” and had this to say:
Delusion Points

Don’t fall for the nostalgia — George W. Bush’s foreign policy really was that bad.

Former German Chancellor Gerhard Schröder says George Bush is a liar in addition to being delusional:
Bush-Schröder Enmity Continues in Memoirs

[Schröder] Ssaid Bush used “almost Biblical semantics” and, in reference to the US president’s repeated mentions of his faith, wrote: “The problem begins when the impression is created that political decisions are a result of this conversation with God.”

On Tuesday, the day that Bush’s own presidential memoirs, “Decision Points,” finally hit the shelves, Schröder went even further. “The former American president is not telling the truth,” he said on Tuesday in Berlin.

Schröder was referring to a passage in Bush’s memoirs in which the former president described a meeting that took place between the two leaders in the White House on Jan. 31, 2002. Bush writes that, when he told Schröder that he would pursue diplomacy against Iraq but would use military force should the need arise, the German leader responded, “‘What is true of Afghanistan is true of Iraq. Nations that sponsor terror must face consequences. If you make it fast and make it decisive, I will be with you.'”

Matthew Norman of the UK Independent has my favorite review. This is unbeatable.
How did this wastrel ever find his way to the White House?

It takes a certain minimal intelligence for the truly dim to have a notion of their own dimness, but this is denied George Bush. He has the self-awareness of a bison.

[…]

Apparently he concludes his memoir Decision Points with the familiar anecdote of how, within days of leaving Washington, he was picking up his dog’s mess with a plastic bag in a Texas park. Evidently he regards this as a cute vignette of the transience of power, as well as his own endearing lack of pomp. Yet what causes the stab of pity is the stupidity at which it hints.

How could anyone in possession of a three-figure IQ (still a moot point with Bush) fail to see what a golden gift that image is to satirists?

His mere resurgence brought back some memories. Here’s a witness account:
Bush: “I probably won’t even vote for McCain”

A group of British dignitaries, including Gordon Brown, were paying a visit. It was at the height of the 2008 presidential election campaign, not long after Bush publicly endorsed John McCain as his successor.

Naturally the election came up in conversation. Trying to be even-handed and polite, the Brits said something diplomatic about McCain’s campaign, expecting Bush to express some warm words of support for the Republican candidate.

Not a chance. “I probably won’t even vote for the guy,” Bush told the group, according to two people present.“I had to endorse him. But I’d have endorsed Obama if they’d asked me.”

We already knew there was no love lost between Bush and McCain. I think Bush voted for Obama.

Oh, before I go, let me bring you this earth-shattering announcement from Captain Obvious:
Tony Hayward says BP was ‘not prepared’ for the Gulf oil spill

The former boss of BP Tony Hayward has admitted that the company was “not prepared” to deal with fallout over the Deepwater Horizon drilling rig disaster in the Gulf of Mexico and the media “feeding frenzy” surrounding it.

No kidding, Einstein!

What’s on your reading and blogging list today?
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