Austerity isn’t a political buzzword for Many Americans

Posted: July 16, 2011 | Author: | Filed under: Economy, financial institutions, hunger, income inequality | Tags: , , , | 6 Comments

You know if you’ve spent any time reading my thoughts that I am highly concerned by the level of income inequality in this country. Probably the thing that most concerns me is the number of people in Washington DC that continue to call for more of the very same policies that have wrecked the economy since the beginning of the century.  Dubya/Cheney brought us deregulation that crippled the financial markets and taxes so low that we know have an unsustainable debt position.  No one administration in US history has waged so many wars–literally and figuratively–on so many fronts and basically left most of the population with a huge bill. I am amazed that people like James Pethokoukis can even find outlets to publish their requests for more of the same. It’s pretty appalling but it’s typical of our media that seems more out of touch these days and ignorant of basic economics than our politicians.

Goldman Sachs doesn’t have to tell you things are bad. I don’t have to tell you things are bad. Everybody knows things are bad. Unemployment is at 9.2 percent (11.4 percent if the official labor force hadn’t collapsed since 2008 and 16.2 percent if you include discouraged and underemployed workers.)  Moreover, the economy grew at just 1.9 percent in the first quarter of this year and may have grown less than 2 percent in the second. Wages and income are going nowhere fast.

When will the White House signal a change of economic direction? Will cutting tax rates and regulation ever make it on the agenda? That may be the only way Obama can win another term. And time is running short.

This man seriously thinks that change in economic direction would come through more ridiculous cuts in taxes and regulation?  A change in economic direction would be towards policies that have worked in the past.  How could any one call for more of the same knowing the results that those kinds of policies yielded? Do we really need another recession and financial market melt down? We don’t have rich people using tax cuts to serve as jobs creators.  We have rich people and corporations using tax cuts to plop their wealth around the world to preserve that wealth.  We have the American middle and working class falling into poverty.

Here’s an example of what ignoring the jobs disaster and enabling wealth hoarders has wrought from The Economist. This article is called ‘The struggle to eat;  As Congress wrangles over spending cuts, surging numbers of Americans are relying on the government just to put food on the table’.

Take food stamps, a programme designed to ensure that poor Americans have enough to eat, which is seen by many Republicans as unsustainable and by many Democrats as untouchable. Participation has soared since the recession began (see chart). By April it had reached almost 45m, or one in seven Americans. The cost, naturally, has soared too, from $35 billion in 2008 to $65 billion last year. And the Department of Agriculture, which administers the scheme, reckons only two-thirds of those who are eligible have signed up.

Republican leaders in the House of Representatives want to rein in the programme’s runaway growth. In their budget outline for next year they proposed cutting the amount of money to be spent on food stamps by roughly a fifth from 2015. Moreover, instead of being a federal entitlement, available to all Americans who meet the eligibility criteria irrespective of the cost, the programme would become a “block grant” to the states, which would receive a fixed amount to spend each year, irrespective of demand. The House has also voted to cut a separate health-and-nutrition scheme for poor pregnant women, infants and children, known as WIC, by 11%. (The Senate, controlled by the Democrats, is unlikely to approve either measure.)

Advocates for the poor consider such cuts unconscionable. Food stamps, they argue, are far from lavish. Only those with incomes of 130% of the poverty level or less are eligible for them. The amount each person receives depends on their income, assets and family size, but the average benefit is $133 a month and the maximum, for an individual with no income at all, is $200. Those sums are due to fall soon, when a temporary boost expires. Even the current package is meagre. Melissa Nieves, a recipient in New York, says she compares costs at five different supermarkets, assiduously collects coupons, eats mainly cheap, starchy foods, and still runs out of money a week or ten days before the end of the month.

It is also hard to argue that food-stamp recipients are undeserving. About half of them are children, and another 8% are elderly. Only 14% of food-stamp households have incomes above the poverty line; 41% have incomes of half that level or less, and 18% have no income at all. The average participating family has only $101 in savings or valuables. Less than a tenth of recipients also receive cash payments from the Temporary Assistance for Needy Families programme (TANF), the reformed version of welfare; roughly a third get at least some income from wages.

Spending on food stamps has risen so quickly because, unusually, almost all the needy are automatically and indefinitely eligible for them. Unemployment benefits last for a maximum of 99 weeks at the moment, and that is due to fall to six months from next year. No one knows exactly how many people have exhausted their allotment, as the government does not attempt to count them. But almost half of the 14m unemployed have been out of a job for six months or more, and so would no longer qualify for benefits under the rules that will apply from January 1st.

Krugman states the obvious or “what ordinary economists” would find the policy measures under these situations in his blog today. It is exactly the opposite of what the group think in Washington DC is producing.

So, terrible growth prospects; low inflation; oh, and low interest rates, with no sign of the bond vigilantes. Ordinary macroeconomic analysis tells you very clearly what we should be doing: fiscal expansion and monetary expansion by any means we can manage; in fact, the case for a higher inflation target pops right out of just about any model capable of producing the kind of mess we’re in.

And what are we talking about in policy terms? Spending cuts and an end to monetary expansion.

I know the arguments — fear of invisible bond vigilantes, fear that 70s-style stagflation is just around the corner despite the absence of any evidence to that effect. But why do such arguments have so much traction, while everything economists have spent the last three generations learning is brushed aside?

One answer is that macroeconomics is hard; the idea that if families are tightening their belts, the government should do the same, is as deeply intuitive as it is deeply wrong.

But the susceptibility of politicians — including, alas, the president — and pundits to these wrong ideas demands a deeper explanation.

Mike Konczal ratchets up my rentier argument, arguing that what we’re seeing is

a wide refocusing of the mechanisms of our society towards the crucial obsession of oligarchs: wealth and income defense.

That has to be right. It doesn’t necessarily take the form of pure cynicism; it’s more a matter of the wealthy gravitating toward views of economic policy that make immediate sense in terms of their own interests, and politicians believing that only these views count as Serious because they’re the views of wealthy people.

But the upshot is terrible: more and more, this really does look like the Lesser Depression, a prolonged era of disastrous economic performance. And it’s entirely gratuitous.

It’s just hard for me to even find words about how misguided fiscal policy is these days.  We have financial markets clamoring for less regulation not because they want to operate efficiently or because they want healthy competition, these folks are asking for removing basic oversight that prevents price gaming, moral hazard, information asymmetry, and oligopoly style games. We have two protracted wars that have never been fully financed.  We have bailouts of failed institutions that have never been financed.  We also have tax cuts that were not offset by spending cuts but made worse by giveaways by a Republican administration and a Republican congress and exacerbated by a Democratic administration. Obama’s stimulus was top heavy with useless tax cuts. What sort of craziness does it take to try to put those same policies on steroids then expect them to create different results?

What we currently are experiencing is a complete Aggregate Demand vacuum.  We have the rich hoarding wealth or putting it in other economies and the rest of the country struggling to just exist if they have jobs.  Then, we have a huge number of people that have neither wealth or jobs.  This is WHEN we need the government to boost spending. We didn’t need all that during the last part of the Bush years but what we got was a period of throwing the US Treasury to the wind.   We’re in deep trouble here folks and I have no faith that any of our policy makers will ever wake up and do the right thing.

France’s Christine Legarde Set to head IMF creating another ‘first’ for Women

Posted: June 28, 2011 | Author: | Filed under: Economic Develpment, financial institutions, Global Financial Crisis, Women's Rights | Tags: , , , | 7 Comments

One of the world’s best economists and France’s Minister of Economics, Finance, and Industry–Christine Legarde–will likely be the newly appointed head of the International Monetary Fund (IMF).   Thankfully, the U.S. joined with other members of the IMF board to approve Legarde which virtually assures her appointment.  Legarde will be the first woman to head the IMF.  She is widely regarded as the best Finance minister in the Eurozone.  She will inherit an IMF still reeling from the sex scandal surrounding Dominique Strauss-Kahn as well as an IMF dealing with the Greek sovereign debt meltdown. The IMF is an important development vehicle for many of the world’s struggling economies.  It has been controversial in the past since it has been seen to implement ideological as well as development strategies.

Lagarde’s presence itself as the first female head of the IMF will go a long way toward reinvigorating any demoralization of the staff. Granted, Lagarde is poised to earn the job because she’s the most qualified and best positioned to help the organization deal with its pressing economic crises. And while putting an extremely successful woman atop the IMF certainly won’t erase the Strauss-Kahn scandal or stop every unwanted advance, it should go a long way toward reminding the IMF’s staffers how much the organization values gender equality and won’t tolerate such behavior at any level. At the very least, having someone in charge who doesn’t have the reputation of being a womanizer is surely a good thing.

It’s unclear how much the internal culture at IMF actually needs fixing. A May New York Times story laid out an image of the IMF as a place “in which romances often flourish—and lines are sometimes crossed,” and where a pressured, “sharp-elbowed” place left complaints of harassment unanswered and where “rules are more like guidelines.” Some 676 women in the organization filed a response to the story, saying they were insulted by the way their workplace was depicted.

Still, Lagarde herself says the organization will need to “take pains to show the outside world” that it is a leader in ethical behavior.  And she acknowledges that staff morale will need some mending following the august organization’s embarrassing time in the spotlight.

Legarde has a formidable intellect and is well-known for her straight and tough talk.  Finance and economics are areas dominated by men with swagger.  She has succeeded in ways that many men have not.

Ms Lagarde was appointed France’s Trade Minister in 2005 and under her watch, French exports reached record levels.

In 2007 she became finance minister, the first woman to hold this post not just in France but in any of the G8 major industrial countries.

Never afraid of speaking her mind, she has blamed the 2008 worldwide financial crisis partly on the male-dominated, testosterone-fuelled culture at global banks.

One of France’s most popular right-wing politicians, in 2009 she came second in a poll carried out by broadcaster RTL and newspaper Le Parisien on the country’s favourite personalities, beaten only by singer and actor Johnny Hallyday.

But her popularity has stretched beyond French shores and she is viewed with high regard in the international arena.

In 2009, the Financial Times voted her the best finance minister in Europe.

She has won international respect for promoting France’s negotiating clout in key forums like the G20, for which France currently holds the presidency.

She has also received plaudits for the key role she played in approving a bail-out mechanism to aid struggling members of the eurozone last May.

Lagarde has played a large role in the many challenges facing the Eurozone since the U.S. financial market meltdown.  Unlike the U.S. which has basically coddled the very executives whose risky behavior and bad business practices have gone largely unpunished, Largarde has worked hard to reform the system to avoid a repeat.  She not only has to herd French politicians but also create consensus among the other members of the EU community.

Lagarde has won praise for steering France through the financial crisis, notably by dispensing $48 billion in aid to French banks, which are repaying the money with interest after stabilizing themselves. She also fought successfully to provide corporate tax relief, aid to small businesses, and tax credits to stimulate research. “None of those things would have happened without Christine Lagarde,” says Frédéric Gonand, an economics professor at Paris-Dauphine University who recently stepped down after four years as Lagarde’s chief economic adviser. “She placed her own mark on economic policy.” A May poll by Ipsos for the magazine Le Point put her approval rating at 51 percent, far above her boss Sarkozy’s 37 percent.

Still, France has fallen behind Germany in making the kinds of changes that could give the economy a serious boost, such as reducing government bureaucracy and labor market restrictions. The need to carry out policies dictated by Sarkozy has also put her in awkward situations at times. In 2009 she had to defend his plan to invest $51 billion in research and development and other projects at a time when France was under attack by other euro zone countries for running a 7.5 percent budget deficit, far above the 3 percent that member countries had agreed on. And despite her role in negotiating the euro rescue package, the terms of that deal, such as automatic sanctions against aid recipients if they didn’t meet agreed-upon targets, were dictated largely by Germany. “France’s game seemed to be, ‘Let’s stick to the Germans as closely as possible,'” says Philip Whyte, a senior research fellow at the London-based Centre for European Reform. “She’s a great facilitator and chair, but she’s probably not in the absolute center of influence.”

I actually can’t tell you how excited I am about this development.  As I’ve said before, she’s been a great success in France.  This shows she can once again bust through a major glass ceiling that’s been there for ages for women in my profession.

Mitch McConnell, Barack Obama, and Fake “Hostage Negotiations”

Posted: June 3, 2011 | Author: | Filed under: 2012 presidential campaign, Barack Obama, financial institutions, Psychopaths in charge, Republican politics, Social Security, The Bonus Class, The Great Recession, U.S. Economy, U.S. Politics, We are so F'd | Tags: , , , , , , , | 17 Comments

Demon Mitch

I am really angry right now, but I’m going to try to write this as calmly as I can. As we all know, Mitch McConnell, who somehow got himself elected to the Senate from the State of Kentucky is holding the entire economy hostage, insisting that the only way Republicans will allow an increase in the debt ceiling is if the Democrats agree to drastic cuts in Medicare.

As Dakinikat wrote yesterday, what McConnell and other Republicans are doing is “playing chicken with financial markets.” We are in serious danger of another Great Depression. These freaks are suggesting that they will tank the economy in their efforts to win points for their party. Michael Tomasky writes:

McConnell has made it abundantly clear that his goal is not to help the economy or anything else; his overriding concern is making Barack Obama a one-term president. When he said Sunday that there will be no deal on raising the debt ceiling without substantial Medicare cuts, he made his motives clear again.

Tomasky is saddened because

…there was a period in the history of this republic, and of the world’s so-called greatest deliberative body, when senators really did, at some crucial point in deliberations, put their partisan differences aside and work out solutions to the country’s pressing problems.

[….]

McConnell benefits from the lingering good feeling that still permeates the institution in which he serves—because people insist on presuming that the leader of the minority party speaks in good faith. But there’s no good faith here.

The only question is whether the Democrats will accede to the hostage-taker’s demands. They’re in a tough position, especially after yesterday’s vote in the House, where nearly half of the Democrats joined all Republicans in refusing to raise the debt limit without deep and permanent cuts. Raising the ceiling is extremely unpopular in polls (of course it always has been, but that fact that didn’t prevent a certain M. McConnell from voting to raise it seven times during George W. Bush’s presidency).

Dakinikat isn’t alone in her warning about the insanity of what McConnell and his Republican pals are doing to us. Even the Wall Street Journal is questioning McConnell’s motivation. Author Stan Collender concludes that McConnell is willing to sacrifice his party’s chance at the White House in an effort to set himself up to be the next Majority Leader in the Senate.

…McConnell has decided that the GOP winning the White House in 2012 isn’t as important to him as the GOP getting the majority in the Senate and that requires continually energizing the base rather than trying to win over independents and Democrats.

If Obama wins and the GOP takes over the Senate, (Roger Ailes aside) McConnell will be the most important and powerful Republican in the United States. That won’t be true if there’s a Republican president, of course. But if all of the best known GOP candidates lose the Republican nomination in 2012 and the 2012 nominee then loses in the general election, the next tranche of potential Republican presidential candidates will be at least two years away. In the meantime, McConnell will be the one negotiating with the White House and stopping its initiatives.

The McConnell statement makes a great deal of sense in this context. Openly attacking Medicare as he did strengthens his credentials with the base even if it weakens them with everyone else. But that’s okay because it’s the base that’s needed to elect Republicans to the Senate next year and that would strengthen McConnell even if it makes life harder…or impossible…for the GOP presidential candidate.

At Market Watch, Rex Nutting writes of Republican threats to cause the U.S. to default on its debts:

This is an insane idea cooked up by political consultants who can count votes but not dollars. Assuming they are willing to go through with their threat, it’s simply terrorism — a sort of tea-party suicide bomb.

Both parties have played games with the debt ceiling, but never has anyone suggested out loud that default is really an option. Until now.

Default would make our problems immeasurably worse. Our borrowing costs would soar, and no one has quite explained how that would make our debts more affordable. Moody’s said Thursday that it might downgrade our debt (making it more expensive for us to borrow) if there were just a chance of default. Imagine the costs if we actually reneged on our promises. Read our full story about Moody’s warning on U.S. debt.

Taking all this into consideration, any reasonable person would be able to see that the Republicans are simply playing games and that in the end they are going to raise the debt ceiling. They aren’t going to go against the wishes of their Wall Street masters. Even McConnell’s hometown paper agrees:

Sen. Mitch McConnell, R-KY, won a prominent place in the weekend news cycle when he made pointed statements last Friday about Medicare, taxes, and what it would take for him to support an increase in the debt ceiling.

He chose his words carefully. Amid blustery talking points, McConnell painstakingly did not say that Republicans would refuse to increase the debt limit. Ultimately, the only threat he issued was about his own individual vote — not about what Republicans will do in general.

[….]

Because the threat is not credible, the only value it has is the value Democrats choose to give it. If they agree with the Republican proposals and want their own political cover, they will treat the threat as credible. They will “save America” from the dastardly Republicans. If they have more responsible strategies they will call the bluff. They hold all the cards.

Therefore, the Democrats and President Obama should simply sit back and let them throw as many tantrums as they want while pointing out how idiotic they are and laughing uproariously.

So what does our President do? He calls Republican and Democratic legislators to the White House for bogus deficit talks that are nothing but an obvious charade to enable these elite criminals to continue stealing American taxpayers blind. He even plans to hold a “golf summit” with Speaker of the House John Boehner.

There can be no other explanation for President Reagan’s Obama’s behavior than that he agrees with McConnell that Paul Ryan’s plan to eliminate Medicare is the way to go. He apparently also thinks it’s worth it to trade our collective economic futures for another four years in the White House. Next up, Democrats and Republicans “compromise” on Social Security “reform.”

Friday Reads

Posted: June 3, 2011 | Author: | Filed under: abortion rights, fetus fetishists, financial institutions, morning reads, Violence against women, Women's Rights | Tags: , , , , , | 28 Comments

Good Morning!

So, you should be able to tell that I’m knee deep in research and preparing to teach an MBA course because I’ve been writing so many finance and econ posts recently.  This morning is going to continue that trend. Plus, the War on Women is still on!  Some mornings it just doesn’t pay to read the news, I swear!

Feeling poorer?  There’s good reason!  According to statistics analyzed by Investor’s Business Daily “10-Year Real Wage Gains Worse Than During Depression”. That’s why no one has any money to spend.  This is especially true when you couple that with sagging wealth from your incredible shrinking home equity.

The past decade of wage growth has been one for the record books — but not one to celebrate.

The increase in total private-sector wages, adjusted for inflation, from the start of 2001 has fallen far short of any 10-year period since World War II, according to Commerce Department data. In fact, if the data are to be believed, economywide wage gains have even lagged those in the decade of the Great Depression (adjusted for deflation).

Two years into the recovery, and 10 years after the nation fell into a post-dot-com bubble recession, this legacy of near-stagnant wages has helped ground the economy despite unprecedented fiscal and monetary stimulus — and even an impressive bull market.

Over the past decade, real private-sector wage growth has scraped bottom at 4%, just below the 5% increase from 1929 to 1939, government data show.

Oh, and Moody’s is preparing for a US Government purposeful default on its sovereign debt.  Feel like you’re in Hooverville yet?  Just wait until Republicans looking to tank Obama’s reelection chances wind up tanking the US economy.

Moody’s Investors Service said today that if there is no progress on increasing the statutory debt limit in coming weeks, it expects to place the US government’s rating under review for possible downgrade, due to the very small but rising risk of a short-lived default. If the debt limit is raised and default avoided, the Aaa rating will be maintained. However, the rating outlook will depend on the outcome of negotiations on deficit reduction. A credible agreement on substantial deficit reduction would support a continued stable outlook; lack of such an agreement could prompt Moody’s to change its outlook to negative on the Aaa rating.

Although Moody’s fully expected political wrangling prior to an increase in the statutory debt limit, the degree of entrenchment into conflicting positions has exceeded expectations. The heightened polarization over the debt limit has increased the odds of a short-lived default. If this situation remains unchanged in coming weeks, Moody’s will place the rating under review.

Moody’s had previously indicated that its stable outlook on the Aaa rating was based on the assumption that meaningful progress would be made within the next eighteen months in adopting measures to reverse the country’s upward debt trajectory. The debt limit negotiations represent a real near-term opportunity for agreement on a plan for fiscal consolidation. If this current opportunity passes, Moody’s believes that the likelihood of anything significant being accomplished before the next presidential election is reduced, in part because the two parties each hopes to capture both a congressional majority and the presidency in the 2012 election, after which the winning party could achieve its own agenda. Therefore, failure to reach an agreement as part of the current negotiations would increase the likelihood of a negative outlook in the near term, because the upward debt trajectory would still be in place. At present, this appears the most likely outcome, in Moody’s opinion.

The Nation reports that the Banking Lobby joins the Republican party in attacking Elizabeth Warren. The fight continues to stop implementation of the Consumer Financial Protection Bureau (CFBP) and to stop Warren from head it up.  The bureau’s main mission is to stop bad lending practices that were rampant and damaging during the subprime mortgage crisis.

During last year’s financial reform debate, Congressional Republicans, along with some bank-friendly Democrats, launched a furious campaign to defeat the bureau. The US Chamber of Commerce led a $2 million industrywide ad campaign opposing the CFPB, using a butcher as its unlikely public face. “Virtually every business that extends credit to American consumers would be affected—even the local butcher,” one ad claimed. “I don’t know how many of your butchers are offering financial services,” quipped President Obama after meeting victims of lending abuses. The financial services firms that will fall under CFPB purview—big and small banks, payday lenders, mortgage brokers—did all they could to weaken it and create special exemptions for their industries, yet the consumer bureau improbably became “one of the central aspects of financial reform,” according to Obama, and the most tangible victory for consumers. Under pressure from consumer advocates, the administration named Warren a special adviser to Treasury Secretary Tim Geithner, her onetime foe, and the bureau’s interim director. Now Congressional Republicans and their industry backers are mounting a last-ditch effort to constrain the CFPB before its launch. Warren, according to associates, views this as an attempt to “pull the arms and legs off of the agency.”

Okay, so I’ll change the topic to how religionists are attempting to outlaw birth control and in vitro fertilization.  They’re doing it by attempting to redefine personhood again.

“The definition of personhood ranges if you’re talking about property law, or inheritance, or how the census is taken,” says Alexa Kolbi-Molinas, an attorney with the American Civil Liberties Union’s Reproductive Freedom Project.

All those differences are exactly what Keith Mason wants to change. He’s president of Personhood USA, a group that’s trying to rewrite the laws and constitutions of every state — and some countries — to recognize someone as a person “exactly at creation,” he says. “It’s fertilization; it’s when the sperm meets the egg.”

Mason says the basic problem is that science has advanced faster than policymaking.

“We know, without a shadow of a doubt, when human life begins,” he says. “But our laws have not caught up to what we know.”

And according to his organization, those laws should recognize every fertilized egg as an individual and complete human being.

This movement is basically trying to push a definition that contradicts medical definitions.  A redefinition law is currently being considered in Colorado, Mississippi. and Alabama.

Medical experts say pregnancy begins when the egg implants in the uterus, not at fertilization. It is at this point that a woman’s hormone levels change and pregnancy can be detected through a urine test. Dan Grossman, an ob-gyn at the University of California-San Francisco who works with Ibis Reproductive Health, noted that about half of fertilized eggs implant and result in pregnancy.

Considering a fertilized egg a person with full rights also could outlaw popular forms of contraception, Grossman said. “This redefinition really could end up reclassifying all of these effective and safe birth control methods as abortifacients, or agents that induce abortions,” because some contraceptives can prevent a fertilized egg from implanting in the uterus, he explained. Grossman added that the idea that birth control methods that can block implantation are the equivalent of abortion is “certainly not a view that’s held by the medical profession or that’s based on medical evidence, and it’s certainly not consistent with what American women and couples want and use to plan their families.”

Alexa Kolbi-Molinas, an attorney with ACLU’s Reproductive Freedom Project, said personhood proponents’ intent is to ban abortion and birth control. She said that giving rights to a fertilized egg could have far-reaching and dangerous consequences by legally separating a woman from her pregnancy. For example, in cases of potentially lethal ectopic pregnancies, personhood would give “all fertilized eggs legal rights under the law [and] calls into question what kind of methods a doctor can actually use to save a woman’s life,” she said.

Amanda Marcotte–writing for Slate–describes the laws as even “weirder than imaged”.  Basically, you can sum it up this way:  women are receptacles and fertilized eggs are people.  This seems unbelievable but it’s unfortunately real and represents just the  latest threat to our autonomy.

Even some anti-abortion groups oppose personhood bills, not because they disagree with the aims of the proponents—who want to ban all abortion, IVF treatment, stem cell research, and many forms of contraception—but because it’s bad and confusing law.  And part of the reason for this is that it creates a lot of confusion over the gap between belief and fact.  For instance, it’s clear that many supporters of personhood laws hope the laws can be used to ban hormonal birth control and IUDs, which they argue work by killing fertilized eggs.  However, attempts to use the law in this way are complicated by the fact that this is not how these contraception methods work; hormonal methods work by suppressing ovulation and IUDs work by making the uterus a hostile environment for sperm (which isn’t going to do much to quell the emasculation concerns of anti-choicers). Realistically speaking, if you believe fertilized eggs are “people” and losing one is equivalent to losing a child, then women who use the pill to prevent ovulation are actually the least murderous amongst us, since they are losing the fewest number of fertilized eggs.  Using these laws to stop the distribution of these kinds of contraception would likely depend on a number of factors, including judges’ willingness to treat made-up beliefs as equal to scientific information.

There’s way more at stake than even abortion and contraception, in fact.  The haziness of these bills could create all sorts of nightmarish scenarios. For one thing, they would absolutely make IVF illegal, but it would also call into question how you handle all the embryos that have already been created in labs.  With IVF being banned, it’s pointless to keep them around anymore, but disposing of them is killing “people.”  Are we prepared to throw people in jail for this?  There’s also a concern about how miscarriages are handled once you’ve determined that a “child” has been lost every time a woman miscarries, no matter how early in her pregnancy. These laws open the possibility of every woman miscarrying being detained for a legal investigation to determine if she has criminal liability for miscarriage. If you think I’m being ridiculous about this, consider that women are already being thrown in jail for giving birth to babies that don’t survive. Personhood laws could roll back the clock on your criminal liability to before you were even pregnant. Unfortunately, there are zealots in law enforcement that are willing to throw a woman who miscarries at eight weeks in jail because someone saw her drinking in a bar six weeks ago, before she probably even knew she was pregnant.

So, want some even more disheartening news?   Melissa at Shakesville finds yet another article tailored for young women that basically says you can avoid most rapes if you just don’t drink alcohol.  No kidding!

The Frisky‘s “Girl Talk: Why Being Drunk Is a Feminist Issue,” by Kate Torgovnick, who totes isn’t a victim-blamer, she swears! It’s just that we don’t live in an ideal world, so because women “do not have control over what men, drunk or sober, will do when presented with our drunkeness,” women should take control over “our side of the equation—how much we drink.”

There is a lot wrong with that article (not least of which is the author’s confusion about what actually constitutes rape), but I’m not going to waste my time fisking garbage. I’ll merely note that the entire premise is fundamentally flawed in the same ways that every other piece in this despicable genre is, in addition to the evident issue that victim-blaming, even if cynically rebranded as “taking control,” inexorably shifts responsibility from rapist to victim

Where have all the consciousness raising groups gone?

So, I really don’t want to talk about Wienergate or who is in New Hampshire or why Chris Christie thinks it’s okay to take state helicopters on personal jaunts.   So, maybe you’ve got something else to offer up?  What’s on your reading and blogging list today?

Playing Chicken with U.S. Financial Markets

Posted: June 2, 2011 | Author: | Filed under: Economy, Federal Budget, Federal Budget and Budget deficit, financial institutions, Republican politics, U.S. Economy | Tags: , , | 9 Comments

You would think that being less than three years off from the biggest financial market collapse since the Great Depression would make beltway lawmakers tread lightly when it comes to upsetting financial markets here and around the world.  You would also think that after we’ve used the Fed for the most unusual transactions in its history, bailed out investment banks and insurance companies, and concentrated bank deposits and securities dealers from ‘too big to fail’ to ‘so huge they’d take the developed world down with them’ that District politicos would find a different outlet for their psuedo outrage. It’s not that they’re mad at financial institutions or what they basically did to the world’s major economies, it’s that their mad at what they did to the U.S. Federal deficit and since blaming teachers and park rangers didn’t work, they’re going to attack the U.S. Treasury Market.  That’s right, they are attacking the base risk free rate used by every asset pricing model from the CAPM forward. That’s like striking at the heart of what makes modern finance work.  Sounds kind’ve stupid doesn’t it?

Well, Tuesday’s Congressional vote on the debt ceiling was a danse macabre aimed directly at turning financial markets upside down whether they want to think so or not.  The equity markets have been dancing around a technical high most of spring and are heading downwards as we speak.  The economy has not healed.  The job market is dismal. Credit markets are still stuck on neutral. Household consumption and Consumer confidence have headed south.  What are these people trying to do our economy?  Tank it?  Finally, there’s a few media voices that are expressing concern instead of admiration for the “brave” insanity of people like Paul Ryan.  Is this coming a little too late? Is the Republican party trying to drive the cost of borrowing for every one in the world up to score a few political points with some block of voters?

Just ignore Tuesday’s vote against raising the debt ceiling, House Republican leaders whispered to Wall Street. We didn’t really vote against it, members suggested; we just sent another of our endless symbolic messages, pretending to take the nation’s credit to the brink of collapse in order to extract the maximum concessions from President Obama.

Once he caves, members said, the debt limit will be raised and the credit scare will end. And the business world apparently got the message. It’s just a “joke,” said a leader of the United States Chamber of Commerce, and Wall Street is in on it. Not everyone found it funny.

No matter how they tried to spin it, 318 House members actually voted against paying the country’s bills and keeping the promise made to federal bondholders. That’s an incredibly dangerous message to send in a softening global economy. Among the jokesters were 236 Republicans playing the politics of extortion, and 82 feckless Democrats who fret that Republicans could transform a courageous vote into a foul-smelling advertisement.

If I were the Chinese or Russian government or any other investor with the ability to transfer funds anywhere else, I would be doing so just to make a point.  Threatening to default on sovereign debt should not be considered political tool. It’s like threatening to use a weapon of mass destruction to score points.

Steven Benen of Washington Monthly calls it a “hostage strategy”. Frankly, it’s domestic terrorism with hostages.

Indeed, one of the more striking aspects of yesterday’s gathering was the increasingly-explicit nature of the Republican hostage strategy.

…Boehner’s let’s-get-a-deal-done stance masks a deeper belief within the House Republican Conference — that Obama will back down eventually and agree to its demands, forcing Capitol Hill Democrats to follow suit.

“Of course, it’s dangerous,” a House Republican close to Boehner said of the politics of a government default. “But it’s dangerous for everybody, especially the president. At the end of the day, [Obama] will have to give in.”

“Who has egg on their face if there is a sovereign debt crisis, House Republicans or the president?” asked another senior GOP lawmaker.

With a potential debt default by the U.S. government just two months off, and a continued standoff between the White House and GOP congressional leaders on how to move forward in boosting that limit, Republican lawmakers say publicly and privately that they believe Obama will be the one who has to cave.

To be sure, the hostage-strategy dynamic isn’t new, but it’s uncommon for Republican members of Congress to be this candid about their plan out loud. One leading GOP lawmaker acknowledged that the Republican plan is “dangerous,” but the party doesn’t care. Another conceded that the GOP is inviting a “sovereign debt crisis,” but figures Obama would get the blame, so Republicans don’t care about that, either.

Okay, so notice the theme here.  Obama is expected to cave and why not?  He’s drawn lines in the sand before.  Remember his promise to not extend tax cuts to the richest of the rich?  He caved.  Remember how he was going to offer a robust public option or at least an exchange with some kind of government-sponsored plan for health care reform?  He caved.  Remember all that posturing over closing Guantanamo or bringing troops home from Iraq and Afghanistan. He caved.

That’s what you get when you negotiate with terrorists and they know you’ll lead with the compromise position.  They’ll keep taking more important things hostage and wait you out.  They know this one is too big to fail but yet, they can’t resist just seeing how much they can get away with this time.  Problem is, this time it’s really having an impact.  The economy is looking as though it will double dip and requires a fiscal boost, for one.  This is like 1937 redux and I’m afraid that more mistakes will be made. I can’t believe that we have a political party that is so intent on damaging an administration that it’s going to frighten the global economy into a possibly game changing reshuffling of what the base of financial world’s ‘risk free’ rate and global safe haven currency may be in the future.  If there was ever any reason or an excuse to dump the dollar as a basis of your economy or start ridding your trade surplus savings of US Treasury holdings, this would be it. Symbolic my fat New Orleans ass!

A testy White House meeting between President Obama and House Republican leaders Wednesday failed to lower the partisan pitch in the capital, much less make progress toward a deal on the federal debt ceiling.

Instead, the two sides traded complaints, accusing each other of partisanship and posturing. Republicans demanded that the administration produce a budget-cutting plan, which the White House said it had already done.

Rep. Paul D. Ryan, architect of a Medicare overhaul aimed at slashing the cost of the popular entitlement program by reducing the government’s open-ended commitment to seniors, accused Obama of “mis-describing” his plan and implored the president to ease up on the “demagoguery.”

In reply, Obama said he was no stranger to cartoonish depictions, reeling off a list of conservatives’ favorite attack points: “I’m the death-panel-supporting, socialist, may-not-have-been-born-here president,” Obama said, according to people familiar with his remarks.

The meeting was meant to resolve pent-up grievances and move toward compromise on the deficit and the cost of healthcare for seniors. But after 75 minutes of talk in the East Room, the two sides parted company with little progress.

Johnathan Chait of The New Republic rightly accuses ‘economist’ John Taylor of the Hoover Institute of ignoring the “severe economic consequences of risking the full faith and credit of the Treasury”.  Just arguing spending cuts are good just doesn’t make sense.  This is especially true given the incredible fragile state of the U.S. economy and recovery.  Is extracting more concessions out of Obama worth global financial market turmoil?

The hack Republican answer is that spending cuts and the debt ceiling are linked, because the debt ceiling is Obama’s fault. But of course the debt ceiling has to get raised under every president, and it would have to be raised even if Obama signed the Paul Ryan budget. The debt ceiling has nothing to do with any particular policy choices — it’s just a routine vote that used to be an opportunity for the minority party to embarrass the president, which Republicans are turning into a hostage opportunity. People like Taylor are dressing this up in principle, but the only principle they can articulate is that spending cuts are good. But that same logic would allow the minority to use the debt ceiling to jack up the president over any policy disagreement at all.

So far, the markets and the world seem to think that American politicians will stop their posturing and settle down to business before the August drop dead date.  They’ve even quoted Churchill who used to say we eventually do the right thing it’s just that we don’t actually do it until the very last minute.  The deal is that not only is the brinkmanship a dangerous strategy but the further concessions–in a fragile recovery at best–are dangerous.  Obama and his cadre of lawyers have made it clear that they will concede any high ground.  Again, we have a history of Obama concessions on political promises.  The problem is that each time the concession comes, it comes at a greater cost.  Every one knew this drama would play out once Obama gave in on renewing the Bush Tax Cuts.  Every thing is negotiable and subject to concession now.  You can’t fake credibility once you’ve show yourself as having none.

Wall Street numbers look bad today.  They’ve been bad all week.  The primary concern is said to be the faltering economy. However, any one that thinks that some of this unease isn’t over the debt ceiling hostage situation kids themselves.

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