Monday Reads

Good Morning!

Okay, so I’m going to show you two nifty pie charts first at The Business Insider.   They basically show how the federal balance is extremely unbalanced because expenses are growing and revenues are not growing at all.  Henry Blodgett correctly points out that there’s quite a bit of growth in ‘entitlements’.  Let me just point out that all this makes complete sense to me  What do you get in an economy that has normalized around a 10 percent unemployment rate or higher if you count the things like disenfranchised workers and the underemployed and couple that with year after year after year after year of excessive tax cuts on the uberrich who happen to be the only ones making money?  Well, you get more and more people that are reliant on unemployment and other government ‘entitlements’ and you get a huge revenue gap.  This is about the most careless set of policy choices made that I’ve seen since I first read up on the Hoover administration and the start of the Great Depression.

The “expense” pie is growing like gangbusters, driven by the explosive growth of the entitlement programs that no one in government even has the balls to talk about. “Revenue” is barely growing at all.

As we’ll illustrate with more of Mary’s charts next week, the US cannot grow its way out of this problem. It needs to cut spending, specifically entitlement spending. We hereby announce that we’ll give a special gold star to the first “leader” with the guts to say that publicly.

I’ll give a box of gold stars to any one that points out to this blowhard that the way to remove the growing entitlements is to put people back to work.  Also, giving tax money to rich people so they can invest in the BRIC economies and buy land where their money is parked in the Bahamas or Grand Caymans is a really, really stupid proposition.  We’ve needed a real jobs program for some times.  People with jobs pay taxes, buy things that are taxed, and don’t require entitlements.  How absolutely stupid do you have to be to not get that?  I don’t even need all those economics and finance degrees to figure that one out.

In the Friday Reads I mentioned that Fox News’ Roger Ailes was caught on tape encouraging colleagues to lie to Federal Investigators.  Well, it seems that lying has finally caught up with one Republican operative.  Maybe people will wake up to the Faux News’ and their dirty tricks now.  Here’s what Barry Ritholtz had to say about his scoop on the indictment.

Here’s what I learned recently: Someone I spoke with claimed that Ailes was scheduled to speak at their event in March, but canceled. It appears that Roger’s people, ostensibly using a clause in his contract, said he “cannot appear for legal reasons.”

I asked “What, precisely, does that mean?”

The response: “Roger Ailes will be indicted — probably this week, maybe even Monday.”

Well, it’s Monday. Does Rupert Murdoch know where Roger Ailes is?   Some times watching Karma unfold is a delightful thing.

I’m not sure if you’re a big enough masochist to spend time with the Sunday news shows anymore, but I do try to catch Christiane Amanpour and she delivered an interesting program yesterday.  She had an exclusive interview with one of Gadhaffi’s sons.  It was extremely interesting and I would recommend you go watch that segment. Amanpour actually traveled to Tripoli this weekend.  We will now refer to the son as Tripoli Saif al-Islam Gadhafi since he seems about as in touch with reality as Baghdad Bob did back in the day.

There was a “big, big gap between reality and the media reports,” Gadhafi told Amanpour. “The whole south is calm. The west is calm. The middle is calm. Even part of the east.”

In response to President Barack Obama’s call for Moammar Gadhafi to step down and the U.N. Security Council’s unanimous vote to impose an arms embargo on Libya and urge nations to freeze Libyan assets, Gadhafi’s son was defiant.

“Listen, nobody is leaving this country. We live here, we die here,” he insisted. “This is our country. The Libyans are our people. And for myself, I believe I am doing the right thing.”

“The President of the U.S. has called on your father to step down. How do you feel about that?” Amanpour asked.

“It’s not an American business, that’s number one,” said Gadhafi, who was dressed casually as he spoke with Amanpour. “Second, do they think this is a solution? Of course not.”

I don’t know about you, but I’m getting kind of tired of watching these jerks that we supported for some time prove exactly what is meant by the label “brutal dictator”.  Could we just once fund and support some one like His Holiness the Dali Lama for a change?  It’s no wonder we still get called ugly Americans.

Speaking of Ugly Americans responsible for diplomatic nightmares, Paul Wolfowitz showed up on Fareed Zakaria’s GPS on CNN on Sunday. Could some one please tell the media we don’t need to hear from the people that screwed up Middle East Policy any more?  Why do I keep seeing this man’s face despite his obvious failures with Iraq policy and peccadilloes made public during his time at the World Bank?  I did want to point you to Zakaria’s interview with Michael Lewis on global  financial crisis. The video is here. He has some interesting thing to say about banks in Greece, Ireland, and here.  Listen for this part:

LEWIS: …And the –the anger – the anger about the Wall Street bailouts, I think, is the beginning of the Tea Party.  I mean the – the injustice of people being rewarded for failure and – and supported by the public purse, that was the source of the original outrage.

ZAKARIA: But it went in a libertarian direction…

LEWIS: It did…It – but – but a qualified libertarian direction, because a true libertarian would be outraged that these Wall Street banks are still being subsidized by the government.  And there doesn’t seem to be any move on the right to – to remove those subsidies, not any – any serious one…But – but the politi – our leadership doesn’t have an interest in – a leadership that is intent on still stabilizing the financial system doesn’t have an interest in calling attention to the outrages of the financial system.  So I think they – Wall Street got very lucky.

Wall Street did not get very lucky.  Wall Street basically has a friend in the White House and tons of people in the Treasury Department.   The Tea Party was distracted by the Health Care Bill.  The kleptocracy is still at it.  Listen to the interview, it’s an earful! Many of us think that were going to get a repeat of the global financial crisis some time soon.  Lewis and I aren’t alone on that thought.

One of the things that’s really making me mad about the current conversation on budget cuts and higher education is the public’s ignorance on just exactly how many states have disabled tenure these days.  Tenure has long been a pet peeve of right wing ideologues who feel that every one should be terminated like they are in the private sector.  Basically, the private sector thrives on political firings and uses payroll cuts as the first line of defense when the bottom line is failing because of their bad, short-sighted, and overly-political decisions.

Here’s a list of states decimating tenure as we speak from articles in The Chronicle of Higher Education.  You know, I’m really sorry that people have to work for private corporations and that their lives are subject to the whims of really mean people, but it’s really no excuse to take it out on those of us that have tried to carve a better way to exist. Take my word for it.  Get yourself a union and they won’t be able to take advantage of you with out taking on a a million other people who have your back!   Those of us in the public sector are willing to forego short term salary highs for long term job security.  It’s evident that a new crop of governors want every one as miserable as employees in the private sector now.  If they intend to do this to us, then I want those seven to eight digits salaries I’d be paid for the 3-5 year short brutal career on Wall Street as a PhD in Financial Economics. I even added a few old links to show you that this is nothing new.   Believe me, tenure isn’t what most people outside of academic think it is …

From Louisiana (this week):

The University of Louisiana system’s Board of Supervisors on Friday voted to approve new rules that will allow its institutions to more quickly dismiss faculty members, even those with tenure, whose programs have been closed.

At a time when the state’s financial climate makes it difficult for campuses to determine their budgets from year to year, that kind of flexibility is key, system officials said. But professors at the board meeting, including representatives of each of the system’s eight campuses, told the supervisors that such a move would erode the protection tenure provides and could ultimately make the system’s institutions unattractive to job seekers and lead current faculty members to leave.

From Nebraska (2oo3):

The University of Nebraska at Lincoln is seeking to eliminate the jobs of 15 tenured faculty members as part of its latest round of budget cuts.

The proposed dismissals, which Chancellor Harvey Perlman announced this month, would save Nebraska about $2.7-million. They are part of a plan to reduce the university’s budget by $26-million, or 12 percent, in the wake of substantial state budget cuts. The new cuts come on the heels of layoffs, proposed in March, that would affect 55 faculty

From Florida (last November) where the attempt to layoff tenured faculty was blocked by an arbitrator.  Notice the decision protected the union faculty but not the nonunion faculty.

An independent arbitrator on Friday ordered Florida State University to rescind layoff notices to several tenured faculty members and slammed how administrators there had decided which jobs would be cut.

In a major victory for the state’s faculty union, Stanley H. Sergent, a Sarasota-based lawyer picked by the university and the union to arbitrate the dispute, held that the university had failed to clearly justify its choices to eliminate certain positions, and had violated a provision of its faculty contract calling for it to try to protect the jobs of those faculty members who had continuously worked there the longest.

In his 83-page decision, Mr. Sergent wrote that the only reason the university had declared certain departments “suspended” was “to allow the effective layoff of all faculty and the selective recall of certain faculty,” apparently for the sake of creating a subterfuge to avoid having to comply with a contractual requirement that it lay off tenured faculty members last. Mr. Sergent characterized the reasoning used by a dean in eliminating one faculty member’s job as “arbitrary, capricious, and unreasonable.”

The arbitrator’s decision applies only to 12 tenured faculty members who belong to the campus chapter of the United Faculty of Florida, and does not cover nine other tenured faculty members who do not belong to the union and also received notices of pending layoffs last year.

From Washington State (May2009):

Community colleges in Washington State could soon be able to lay off tenured faculty members much faster than normal, according to the Seattle Post-Intelligencer.

At its regularly scheduled meeting next month, the State Board of Community and Technical Colleges will decide whether to declare a financial emergency — a move allowed by a state law passed in 1981 to deal with budget crunches. Such an emergency would speed up the process for laying off tenured faculty members in that they would get only 60 days’ notice of layoffs and the grounds on which they could appeal the decision would be limited, the Post-Intelligencer reported.

I would also like to take this space to mention that I no longer have access to Social Security and that my state pension and the matches that I get from the State basically are what the private sector donates to social security on the behalf of private sector workers.  Many states have pension plans that replace Social Security.  Therefore, I’m personally not getting any thing ‘special’ from taxpayers.  Also, when the defined benefit plan showed up short this year, they decreased the contributions to my optional retirement plan and the others who selected that option to make up the shortfall in the defined benefit pool. Wall Street stole my appreciation and then the state took more from me to pay for their problems in other folks’ annuities.  Other state employees–like me–paid for that shortfall.  It came from our compensation.  I’ve just about had it up to here with reading a bunch of grumbly idiots on other blogs that have no idea how state employee pensions are managed and funded.  If you want to go after high paying state employees that are worthless, try taking it out on the university football coaches and the damned governor’s staff for a change.  It’s not us little guys!

Anyway, it’s Monday morning and I’m a curmudgeon today.  Think I’ll spend the day with the TV off and I’ll stay here on Sky Dancing with the sane people!  Now, where’s my coffee?

What’s on your reading and blogging list?


Indiana Democrats Flee to IL and KY to Avoid Voting on Right to Work Law

Indiana House with Empty Democratic Seats

Yes, folks, it’s going viral! Indiana House Democrats have emulated Wisconsin Democratic Senators and leave the state rather than vote on a draconian anti-union bill.

Seats on one side of the Indiana House were nearly empty today as House Democrats departed the the state rather than vote on anti-union legislation.

A source tells The Indianapolis Star that Democrats are headed to Illinois, though it was possible some also might go to Kentucky. They need to go to a state with a Democratic governor to avoid being taken into police custody and returned to Indiana.

The House came into session twice this morning, with only three of the 40 Democrats present. Those were needed to make a motion, and a seconding motion, for any procedural steps Democrats would want to take to ensure Republicans don’t do anything official without quorum.

With only 58 legislators present, there was no quorum present to do business. The House needs 67 of its members to be present.

Indiana Government Mitch Daniels, who has completely unrealistic presidential aspirations tried to laugh off the Democrats’ strategy.

downplayed the boycott and the labor protests and laughed off suggestions that he might send the state police to pick up Democrats, some of whom left the state to escape their jurisdiction.

[….]

The right-to-work bill would prohibit Hoosier companies from entering into contracts requiring employees either to join a union or pay union dues or fees.

The bill would have a dramatic impact on teachers.

Read the rest of this entry »


The Uncertainty Blues

There are several headlines today that you really don’t want to see if you’re hoping for an economic recovery.  This one is especially chilling:  ‘Home prices fall 4.1%, near 2009 lows’. There are good reasons this doesn’t bode well.  The first is that the construction sector is a large economic generator in our economy and it also is a job generator. The second is that when people feel less wealthy, they spend less.  Both tend to have recessionary effects.  It doesn’t look like things will improve either.

And things may get a lot worse, said Robert Shiller, a Yale economist and half of the Case-Shiller team, in a web conference after the report’s release.

“There’s a substantial risk of home prices falling another 15%, 20% or 25% more,” he said.

Shiller cited a few reasons for his bearish stance. The government is expected to reduce the presence of Fannie Mae and Freddie Mac in the housing market. These agencies currently provide loan guarantees for about two-thirds of mortgages. If they fade away, private mortgage money will have to fill the gap and the cost of mortgage borrowing will surely rise. That will hurt home prices.

There’s also talk of possibly ending the mortgage interest tax deduction for many homeowners. Meanwhile, the weak economic recovery may be threatened by higher oil prices as a result of turmoil in the Mideast.

At the web conference, Shiller’s index partner Karl Case wasn’t much more optimistic.

“I see [the market] bouncing along the bottom with a slight negative trend,” said Case, an economics professor emeritus at Wellesley College.

Unrest in Libya and Bahrain are also driving up oil prices. Both of these countries are oil producers.  This also drove stock market prices lower.  This is also not good as stock market decreases also make people feel poorer so they spend less.  Additionally, higher gas prices forces people to readjust their budgets.

U.S. investors returned from the long holiday weekend in a selling mode amid increased concern about developments in North Africa and the Middle East.

Global financial markets recoiled overnight as Libya appeared on the verge of civil war and continuing protests in Bahrain sent crude prices surging. After Brent crude futures approached $110 per barrel in London, benchmark West Texas Intermediate (WTI) surged above $91 per barrel in New York trading midday Tuesday.

Higher energy prices threaten the global economic recovery, on which much of the two-year rally in stocks has been based. Heading into this week, the S&P was up 100% from its March 2009 low, meaning both that continued growth is “priced into” stocks and there a lot of paper profits waiting to be booked.

In recent trading, the S&P was down 1.6% while the Dow was off 1.1% and the Nasdaq by more than 2%.

On top of this, we still have high unemployment coupled with increasing threats of lay offs for state and local workers.  Any lay offs or decreases in wages and benefits has the same effect: it makes people feel poor and makes them re-arrange their budgets.   Unions have been largely responsible for benefits and salary levels enjoyed by all workers. Any attempts to further erode collective bargaining is sure to suppress wages and benefits in all sectors.  Several polls today seem to indicate that most people are aware of this and oppose weakening unions.  Here’s one such poll from USA Today.

Americans strongly oppose laws taking away the collective bargaining power of public employee unions, according to a new USA TODAY/Gallup Poll. The poll found 61% would oppose a law in their state similar to such a proposal in Wisconsin, compared with 33% who would favor such a law.

All of this uncertainty is sure to impact the economic outlook.  Many of these are indicative further weakening. Remember, tax cuts for businesses work only if they have revenues.  They won’t have increased revenues without customers.  Higher oil prices–as well as higher prices for other commodities like food–are likely to transfer dollars away from discretionary spending.  We could see further weakening in the demand for consumer durables like cars and big appliances.  I’ve noticed some rather spectacular sales this weekend for these items.  We’ll see in a few months if those commercials today are acts of desperation to unload inventory.

It appears that many in government are purposefully trying to shrink not only the government but also the economy. I’m not sure why every one has decided to go to faith based tax cuts rather than rely on economic theory.  It’s as if years of experience and evidence have been thrown out the window.  Many Republican governors are doing the same thing that created budget problems for Wisconsin.  They are creating deficits by passing tax cuts benefiting the rich and passing the sacrifice to the poor and middle class. The poor and middle class are the consumers that really matter in an economic crunch.  They spend most of their money and they do it on goods that generate local jobs. Remember, this just happened at the national level too. We’ve seen tax cuts go predominantly to the wealthy while talk of benefit cuts are rampant.

State budgets across the country are in disarray as a weak economy, the end of tens of billions in Recovery Act funds, and a GOP-led House that is pushing for deep cuts to many programs that benefit state and local governments set the stage for massive in shortfalls over the next two years. Instead of making the tough choices necessary to help their states weather the current crisis with some semblance of the social safety net and basic government services intact, Republican governors are instead using it as an opportunity to advance several longtime GOP projects: union busting, draconian cuts to social programs, and massive corporate tax breaks. These misplaced priorities mean that the poor and middle class will shoulder the burden of fiscal austerity, even as the rich and corporations are asked to contribute even less.

Follow that Think Progress link to find some of the worst states with worst abuses.  Arizona tops the list.

Now, however, Governor Jan Brewer is proposing to kick some 280,000 Arizonans, mostly childless adults, off the state’s Medicaid rolls. Brewer claims such a move is the only way to get the state’s fiscal house in order, as it would save $541.5 million in general funding spending. Brewer also wants to save $79.8 million by dropping 5,200 “seriously mentally ill” people from the state’s Medicaid program. Instead of balancing out these draconian cuts with additional revenue increases or simply not making the cuts in the first place, Brewer instead signed $538 million in corporate tax cuts into law two weeks ago.

Other states to watch out for are New Jersey, Texas, Michigan, Ohio and of, course, Wisconsin.  Here’s an example from Florida.

Scott’s radical budget proposal, unveiled at a tea party event, includes $4.6 billion in spending cuts that would result in the direct loss of more than 8,000 jobs. It would also privatize large areas of state services, including juvenile justice facilities, Medicaid, and some hospitals. Education spending would be cut by more than $3 billion and teachers and other public employees would see their pensions under threat. Such deep cuts in essential programs and services are necessary to offset Scott’s proposal to cut corporate and property taxes by at least $4 billion.

If these things occur, you can look forward to a return to the Depression Years.  I guarantee it.


States of Denial

Gail Collins messed with Texas today. I’m rather glad she did because it shows exactly how much Texas seems to exist in a vacuum of its own making.  The head denier of reality is its wacko Governor who appears to get elected by saying the right things and doing very little.  The state that forces its antiquated views through textbooks onto the rest of the nation has a huge problem in the numbers of children having children.  This leads to all kinds of social problems that I probably don’t have to discuss here.

But, let’s just see how bad it gets down there with the denier-in-chief who seems to think abstinence education works and the Texas education system works when Texas’ own statistics show that they don’t work at all.  Republicans get elected spewing untruths and he’s a prime case in point.   The state’s out of money and like my governor Bobby Jindal, the first place Republican governors look  is for cuts to education rather than look for new revenue sources. What is worse, they talk about improving  children’s future while doing draconian cuts to children’s schools.  How do they get away with it?

“In Austin, I’ve got half-a-dozen or more schools on a list to be closed — one of which I presented a federal blue-ribbon award to for excellence,” said Representative Lloyd Doggett. “And several hundred school personnel on the list for possible terminations.”

So the first choice is what to do. You may not be surprised to hear that Governor Perry has rejected new taxes. He’s also currently refusing $830 million in federal aid to education because the Democratic members of Congress from Texas — ticked off because Perry used $3.2 billion in stimulus dollars for schools to plug other holes in his budget — put in special language requiring that this time Texas actually use the money for the kids.

“If I have to cast very tough votes, criticized by every Republican as too much federal spending, at least it ought to go to the purpose we voted for it,” said Doggett.

Nobody wants to see underperforming, overcrowded schools being deprived of more resources anywhere. But when it happens in Texas, it’s a national crisis. The birth rate there is the highest in the country, and if it continues that way, Texas will be educating about a tenth of the future population. It ranks third in teen pregnancies — always the children most likely to be in need of extra help. And it is No. 1 in repeat teen pregnancies.

Which brings us to choice two. Besides reducing services to children, Texas is doing as little as possible to help women — especially young women — avoid unwanted pregnancy.

For one thing, it’s extremely tough for teenagers to get contraceptives in Texas. “If you are a kid, even in college, if it’s state-funded you have to have parental consent,” said Susan Tortolero, director of the Prevention Research Center at the University of Texas in Houston.

Plus, the Perry government is a huge fan of the deeply ineffective abstinence-only sex education. Texas gobbles up more federal funds than any other state for the purpose of teaching kids that the only way to avoid unwanted pregnancies is to avoid sex entirely. (Who knew that the health care reform bill included $250 million for abstinence-only sex ed? Thank you, Senator Orrin Hatch!) But the state refused to accept federal money for more expansive, “evidence-based” programs.

“Abstinence works,” said Governor Perry during a televised interview with Evan Smith of The Texas Tribune.

“But we have the third highest teen pregnancy rate among all states in the country,” Smith responded.

“It works,” insisted Perry.

“Can you give me a statistic suggesting it works?” asked Smith.

“I’m just going to tell you from my own personal life. Abstinence works,” said Perry, doggedly.

There is a high cost to a state to living in this kind of denial.  Teen moms and children of teen moms are generally not a productive group of citizens.  You pay to prevent this realistically or you pay for their and your mistake to do so throughout their entire lives.  But, this seems to be the way of the new brand of Republican governor.  These guys start running for president the minute they hit the mansion.  They do so by following a litmus test of Republican items–regardless of the consequences to their states–that will make them sound like purity experts when they hit Iowa and New Hampshire.  They will undoubtedly leave their state in ruins, but that won’t be the story by the time they’re on the lecture and talking heads circuit for higher offices.

The Governor of New Jersey is doing the same thing.  He can read off a litmus list for the republican inquisition while at the same time ensuring the people of the state he governs languish.  Again, he screams about the importance of the future of the children while simultaneously downsizing it.

In a clear shot at congressional Republicans over calls for curbing entitlement programs, he said, “Here’s the truth that nobody’s talking about. You’re going to have to raise the retirement age for Social Security. Woo hoo! I just said it, and I’m still standing here. I did not vaporize into the carpet.

“And I said we have to reform Medicare because it costs too much and it is going bankrupt us,” he continued, later comparing those programs to pensions and benefits for state workers that he’s been looking to reel back.

“Once again, lightning did not come through the windows and strike me dead. And we have to fix Medicaid because it’s not only bankrupting the federal government but it’s bankrupting every state government. There you go.”

Clearly looking to blunt criticism of his famously combative style, the former federal prosecutor said there is a method to the battles he picks, insisting, “I am not fighting for the sake of fighting. I fight for the things that matter.”

The speech was titled “It’s Time to do the Big Things,” and Christie suggested the items that Obama called for as “investments” in his State of the Union address were “not the big things” that need Washington’s focus.

“Ladies and gentlemen, that is the candy of American politics,” Christie declared, adding that it appeared to be a “political strategy” – or game of budgetary chicken – that both Republicans and Democrats are playing.

“My children’s future and your children’s future is more important than some political strategy,” he said. “What I was looking for that night was for my president to challenge me … and it was a disappointment that he didn’t.

It’s difficult not to scream when you hear these folks talk about our children’s futures while cutting education, telling children abstinence fairy tales, turning down money for infrastructure improvements —like the nitwit Republican Governor Rick Scott in Florida–that will likely create better environments for business and jobs, and refusing to look at their tainted tax systems that usually punish the poor and flagrantly ignore the assets and the incomes of the rich.  It is clear whose children they have in mind.  It is not yours or mine or the majority of the people who live in their states.

These guys seem intent on turning their states into third world countries.  Many people seem more intent on letting them do it as long it doesn’t cost them anything immediate. Our fellow citizens appear beguiled by fairy tale promises and bribes of low taxes.  They should not be surprised then by a future where they and their adult children live in rented shacks together with few available public services.  They better just hope they don’t get robbed, the shack doesn’t catch fire, and there are no grandchildren needing public education.  They’re voting to downsize these things into extinction.

Read the rest of this entry »


Tuesday Reads: Tim Geithner in Control of Obama’s Economic Policy, and Other News

Good Morning!! The snow is slowly melting outside my house, and I’ve come down with Spring fever! No more snowstorms please, Mother Nature. Anyway, at least for this week, we are getting temperatures in the 40s and 50s. It is going to be chilly again tomorrow, but after that–springlike! After the frigid winter we’ve lived through, these temperatures feel amazing. Maybe this will make the bad news from DC a little more bearable. I hope so.

This morning I want to focus on an important article that comes via David Dayen at FDL. It’s a piece at The New Republic about Timothy Geithner, written by Noam Scheiber. First a little aside.

Back in November, I wrote a post about the axing of Obama’s economic team and noted that Geither was the last man standing.

In that post, I quoted Andrew Cockburn of Counterpunch:

If Barack Obama needed any help in guiding the Democratic Party over the cliff he certainly got it from Treasury Secretary Timothy Geithner. Voters have told pollsters that the state of the economy, their own in particular, was their principle concern. Though impelled by the specter of unemployment and homelessness, the image of Geithner, toady to the bankers, can only have encouraged them in their fury. A sensible president would therefore already be running out the plank prior to giving this disastrous financial overseer an encouraging shove between the shoulders. But in this case, we may not be that lucky. CounterPunch can reveal the crucial role played in these matters by a group close to the President but unknown to the outside world.

A knowledgeable insider told Cockburn that despite Larry Summers’ reputation as a corporate tool,

“Larry has some idea that there is more to the economy than just the welfare of large banks,” this official suggests. “He did push for a larger stimulus and more jobs programs, for example. Tim just cares about banks.”

I then went on to indulge in a little conspiracy theorizing based on Cockburn’s information. But that’s beside the point right now. The point is that after writing that post, I came to the conclusion that Geithner was running economic policy in the Obama administration.

Getting back to the article at TNR, Scheiber purports to explain how Geithner survived the massacre of the economists. One interesting tidbit in the lengthy article is about Geithner’s relationship with Larry Summers, who acted as Geithner’s mentor and patron early on.

In 1993, Geithner caught the attention of [a] prominent patron—Larry Summers—whom Bill Clinton had appointed as his treasury undersecretary. Summers took a personal interest in Geithner’s career and promoted him each time he rose through the Treasury ranks.

And then during the Obama administration, Geithner apparently stabbed his patron in the back, becoming President Obama’s primary economic adviser–even though Geithner isn’t an economist. (Neither is anyone else on Obama current “economic team,” as Dakinikat frequently points out.)

Geithner actually sounds a lot like Obama–he’s really good at sucking up and convincing people he’s on their side–until he slides in the knife. Regarding Geithner’s time at the IMF, Scheiber writes:

According to former co-workers, Geithner was deft at bringing skeptical colleagues on board. One technique involved homing in on possible dissidents and absorbing their suggestions into his proposals.

Sound familiar? A bit more:

Perhaps most important, Geithner was scrupulously attuned to the temperament of the boss. Like Obama, he evinced a strong aversion to blather. During meetings with the president, he would say little, and usually not until the end, when his opinion was solicited. “I thought [Geithner] got the president really well,” says a former administration official who interacted with him on nonfinancial matters. “When he was in trouble, I said to someone, ‘He just needs to hold on. He’ll be fine with Obama. Once they get to know each other, they’re like the same person.’”

Scheiber describes an epic struggle between Geithner and Summers over how to deal with the banks that had crashed the U.S. economy. Summers argued for some form of nationalization, while Geithner claimed the banks just needed more capital and they could recover.

If Geithner was right, the capital shortfall was much more manageable than Summers feared. The banks might be able to fill it with minimal government help, simply by selling shares to investors. But, if he was wrong, the banks would stumble along in a kind of vampire state, sucking credit from the economy and exacerbating the recession. In the worst case, fears of insolvency could trigger a modern-day version of Depression-era bank runs.

Hey, wait a minute. That sounds like what is happening to our economy right now. But, never mind, Geithner won the battle that counted–the battle for Obama’s favor.

Part of what Geithner convinced Obama of was “that it was ultimately better politics to risk a backlash with unemployment at 10 percent than to feed the backlash and watch the economy shrink further.” So it’s Geithner we have to thank for the new normal of high unemployment, poverty, and suffering among the middle, working, and lower classes.

Finally, what horrified David Dayen was Geithner’s out-front claim that–in Dayen’s words, “what’s good for Wall Street is good for America.” Geithner:

“I don’t have any enthusiasm for … trying to shrink the relative importance of the financial system in our economy as a test of reform, because we have to think about the fact that we operate in the broader world,” he said. “It’s the same thing for Microsoft or anything else. We want U.S. firms to benefit from that.” He continued: “Now financial firms are different because of the risk, but you can contain that through regulation.” This was the purpose of the recent financial reform, he said. In effect, Geithner was arguing that we should be as comfortable linking the fate of our economy to Wall Street as to automakers or Silicon Valley.

In response, Dayen writes:

I don’t even know what to say about this. We’re just a few years removed from the financial oligarchs destroying the global economy through their own greed and negligence. And the man put in charge of regulating them, who had a front-row seat to all this destruction and who has been given expanded powers under Dodd-Frank to see to it that never happens again, thinks that there’s a great “financial deepening” about to take place where the demand for sophisticated financial innovations will jump. Therefore, the financial sector will need to grow and become the most reliable spur of the US economy. That’s his feeling. And regulation can reduce the risk, even though the new regulations barely put a dent into Wall Street’s core business, and are being systematically defunded besides.

Financialization of the economy has led to practically nothing but pain for the average worker and risk for the taxpayer. It has turned the allocation of capital into the placing of bets at a casino, and the stock market into a particularly sophisticated video poker game. This territory was all covered before in the run-up to the Great Depression as well, and we know the precise causes and remedies involved. Geithner prefers not to address the plutocracy he’s really advancing here – where elites provide “financial deepening” services abroad and amass ridiculous profits that they wall off.

This incredibly amoral conman is partnering with our conman chief executive to sell out our country, our lives, and those of our children and grandchildren. There’s lots more of interest in the article, particularly the information about Geithner’s upbringing.

I’ll wrap this up with a few other stories, and then throw the floor open to your links and opinions. Did you hear that Stephen Baldwin is suing Kevin Costner over Costner’s oil-eating invention?

It seems Baldwin sold his shares in Costner’s company right before BP shelled out $50 million for the machines.

Jane Hamsher offers a flow-chart of the principle players in the scandal over US Chamber of Commerce’s attempts to discredit Wikileaks, Glenn Greenwald, Brad Friedman, David House, and others who have supported wikileaks and Bradley Manning. Joseph Cannon has also been covering this story.

Brad Friedman’s post especially is a must read. Get this, the Chamber paid 2 million dollars a month for dirt on Friedman, and got completely inaccurate information. And that inaccurate information came from corporations who are paid billions by our government “to target terrorists.” But Obama wants to cancel heating assistance for poor people to save money.

Mitt Romney is ahead in the latest NH poll, at 40%, for whatever that’s worth. Romney was always going to win NH. They always vote for New Englanders up there. The real test for Romney will be Iowa.

The Patriot Act extension has been passed by the House on the second try. I think the Egyptians will probably get rid of their emergency law before we get rid of ours.

There are “massive” protests in Iran, inspired by the dramatic events in Egypt. There have also been more protests in Yemen and in Bahrain. When will it happen here?

What are you reading and blogging about today?