MacroEconomic Malpractice

If the U.S. economy was a patient, I’m sure we all would be talking medical malpractice by now. After having 8 years of nothing to lecture on during the Clinton years other than, yes Keynesian economics works, we are now on our 9th year of wtf? (Feel sorry for my poor undergrads.) We’re still dealing with the spinning of the complete failure of Voodoo Economics, Trickle-down economics, Reaganomics or Supply Side economics from the free spending, tax dollar giveaway as success story with no real point other than supporting faith based economic hypotheses and the rights of the ultrarich to stay that way in to something it was not. I simply cannot believe that any REAL democratic administration with some roots in the Clinton years could possibly be choosing to continue the failed policies of the right.

So, since I’ve been on a populist rant over Wall Street Bonuses, let me just fuel the fire some more with this little piece in the Washington Post website today with the unsurprising title “Bailout Overseer Says Banks Misused TARP Funds”. No kidding cupcake. Why do you suppose the same risk happy folks that got their bonuses last year are getting big ones this year? We might as well funded a national road trip to Vegas.

Many of the banks that got federal aid to support increased lending have instead used some of the money to make investments, repay debts or buy other banks, according to a new report from the special inspector general overseeing the government’s financial rescue program.

The report, which will be published Monday, surveyed 360 banks that got money through the end of January and found that 110 had invested at least some of it, that 52 had repaid debts and that 15 had used funds to buy other banks.

logo-mr-monopolySo, we’re basically funding a real time game of monopoly. Okay, Republicans, let me just explain this to you ONE more time. MONOPOLY is the antithesis of market capitalism. It isn’t Socialism. Socialism is NOT an economic concept any more than GOD is a Buddhist one. It’s the difference between, I buy houses in Houston and I buy All the houses in Houston. We actually prove markets are efficiently working by comparing competitive markets to centrally planned ones and find the same result when they are. However, that’s IFF (if and only if) things in both circumstances are perfect (which they NEVER are). We live in a land of frictions and 30 years of research shows that we’ve just about got as much chance of having the Pure Capitalist dream as we do the Pure Marxist dream. Zip, Zilch, nada, no way! Our lives our lived in imperfect markets where government sometimes steps in to make things worse, and some times steps in to make things better. We’re basically in the search for the middle path.

Right now, we’re funding and sustaining a financial market structure that perpetuates extraordinary profits for the capital owners, less products available to the market, and higher prices for every one. It is also well-researched that bigger institutions do not bring efficiencies of scale to the market so how is this a good thing? Just pick up any basic microeconomics book and study market structures. The bottom line is a welfare loss for the market as resources will be inefficiently used, quantities will be reduced, prices will be higher, and the demand side of the market will experience a loss of welfare. (Sorry, I keep having to remind myself I have the summer away from theory, but I’m an old dog and that’s a new trick for me.) The empirics on this have supported these theories for hundreds of years!

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Obama and the Enhanced Status Quo

monopoly smoke ringsWe were promised changed. What we are getting is perpetuation of the status quo. Let’s try this headline at the Guardian on for size “Goldman Sachs to make record bonus payout”.

Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm’s 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.

A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm.

Staff in London were briefed last week on the banking and securities company’s prospects and told they could look forward to bumper bonuses if, as predicted, it completed its most profitable year ever. Figures next month detailing the firm’s second-quarter earnings are expected to show a further jump in profits. Warren Buffett, who bought $5bn of the company’s shares in January, has already made a $1bn gain on his investment.

The bold part says it all. There continues to be a systematic elimination of competition from merger mania in the financial sector which has created two classes of too-big-to-fail institutions. We now have those that function completely with government funding and those that function by funding candidates for government. Goldman Sachs is benefiting immensely from both.

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At WHAT point does HE own it?

The Political Memo in today’s NYT minces few words in Blaming the Guy Who Came Before Doesn’t Work Long and I’d like to just tag right along with that. Its thesis is clear. The Obama administration wastes no opportunity to turn the phrase “we inherited a lot of problems”.

As President Obama struggles to turn around the moribund economy and confront multiple international issues, he wastes few opportunities to remind the country that the problems are not of his making.

“The financial crisis this administration inherited is still creating painful challenges for businesses and families alike,” Mr. Obama said this week as he proposed spending limits.

“We inherited a financial crisis unlike any that we’ve seen in our time,” he said last week as he thrust General Motors into bankruptcy.

His advisers and allies follow the same script. “The Obama administration inherited a situation at Guantánamo that was intolerable,” James L. Jones, the national security adviser, said of the military prison in Cuba. Secretary of State Hillary Rodham Clinton defended the Obama foreign policy in the same vein. “We inherited a lot of problems,” she said.

Mr. Obama is hardly the first president to point to his predecessor. Ronald Reagan blamed Jimmy Carter for the poor economy he inherited, just as Bill Clinton blamed the first President Bush and the younger Mr. Bush then blamed Mr. Clinton. Former Bush aides like Karl Rove argue that Mr. Obama has done it more extensively and routinely than other presidents have, although the Obama team denies that.

But at a certain point, a new president assumes ownership of the problems and finds himself answering for his own actions. For Mr. Obama, even some advisers say that moment may be coming soon.

I’d really like to extend the question of when does he own it a bit further to what good does saying you inherited all these problems do when your solution is basically a continuation of those same failed policies?

In the two major areas of concern during the election and primary–the Iraq War and the Financial Crisis–we not only seen continuation of the same dysfunctional policies, but we’ve seeing appointment of the same dysfunctional policy makers in both cases. Timothy Geithner (with Obama’s consent and support) has basically been following the same policies of his predecessor Secretary of Wall Street Bailouts Hank Paulson. I know this because oc-08I’ve been following the economic policies quite closely because of obvious reasons. I have had to rely on others for examples in other policy areas. To say there is a plethora is understatement. I am getting tired of flushing spam from seriously delusional Obama voters into byte heaven that mostly reads: “Hillary would have done the same thing” and “he’s just doing what he has to at the moment, just wait it will change, you’ll see.”

Cannonfire has run a series of threads demonstrating how closely aligned President Obama’s policies have been to his predecessor. I’ve spent a few days following the links from The Worm turns and turns. One link is to Paul Craig Roberts at Global Research and the title absolutely says everything. It’s called Watching Obama Morph Into Dick Cheney. This one especially appeals to me because of a post I took a lot of grief for back in the day that used a side-by-side Broke Back Mountain view of the boyz will be boyz.

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One Person One Vote Died a Year Ago today

222px-Black_Ribbon.svgIn an important landmark case Reynolds v. Sims, 377 U.S. 533 (1964), the Supreme Court established one of the most significant voting rights rulings impacting our Republic since the enfranchisement of woman and the election of U.S. senators by popular vote. Both of these occurred earlier in the century.  Basically, Reynolds v Sims established the means to ensure  that the United States was a truly representative form of government.  It provided a legal way to enforce the idea that legislatures are those instruments of government elected directly by and directly as representatives of the people. Because of this, all elected officials should be elected in a free and unimpaired fashion. One Person one vote is a bedrock of our political system.

That was until one year ago today, when the Democratic Rules and Bylaws Committee declared the voters of Michigan and Florida to be one half of a person. This decision, done in a closed room behind close doors, was done in the name of party unity and led to the famous “party unity my ass” uttered at The Confluence that led to the PUMA movement. It led to spontaneous outrage across the country.

What began as a Democratic Party initiative to change the caucus and primary schedule to appease some special interest groups, wound up as a means to disenfranchise two states as Florida and Michigan were selectively punished for their decisions to change the dates of their primary caucuses. While other states similarly changed their dates, these two states were singled out for retribution. This was a stinging indictment of our entire political system for those of us that supported Hillary Clinton and were still stinging from the earlier disenfranchisement of Florida under the Bush v. Gore ruling that essentially gave us a President who mostly likely did not win the election. Every one knows how well that worked out.

080530-vote-florida-hmed-1p.h2Here are some reports from the day. This one is from MSNBC’s Chuck Todd called Nothing is fair about Florida and Michigan. Here was his suggestion for the situation at the time.

Why not consider punishing the party leaders and not the voters? Couldn’t the committee take away the states’ superdelegate votes? After all, it wasn’t the voters who demanded the states break party rules, but rather the leaders of the respective state parties.

Of course, this is too logical. The likely ruling on Saturday will probably highlight the party’s inability or reluctance to punish the superdelegates. There is a challenge from a Florida superdelegate claiming the party violated its own charter by stripping the state of both pledged delegates and superdelegates. Most members of the Rules Committee I’ve talked to indicate that he may be right. Keep in mind members of the Rules committee are all superdelegates themselves.

The Golden Rule could apply: Do unto other superdelegates as you would want done unto you.

The second idea the committee should be considering but isn’t reflects everything we’ve learned throughout this long primary season.

As many have noted, census data for each state have been remarkably determinative of results since Super Tuesday. In fact, the support groups for the two candidates have been incredibly stable. Why not apply what we’ve learned about the support groups of both candidates and split the delegates accordingly?

Of course, we found out soon enough that the party leaders did have their agenda and it was to ensure that we had their Candidate. We’re still unraveling the reasons for this travesty. We endured sexism, misogyny, and race-baiting through out the entire election cycle. We will be paying for this most undemocratic of decisions for years to come. We could have had a President that supports Abortion Rights and Universal Health Care. We could have had a President that refused to vote for FISA. We could have had a President that wasn’t controlled by lobbyists, Wall Street Fat Cats, and was a policy wonk extraordinaire. Instead, as Ted Ralls of Common Dreams, puts it, we got this:

We expected broken promises. But the gap between the soaring expectations that accompanied Barack Obama’s inauguration and his wretched performance is the broadest such chasm in recent historical memory …From healthcare to torture to the economy to war, Obama has reneged on pledges real and implied …Obama is useless. Worse than that, he’s dangerous. Which is why, if he has any patriotism left after the thousands of meetings he has sat through with corporate contributors, blood-sucking lobbyists and corrupt politicians, he ought to step down now–before he drags us further into the abyss.

I don’t know about you, but I WILL NEVER FORGET THIS DAY OF INFAMY.puma-head


What’s our Return Policy?

State of Disbelief sent me this link earlier today.  I very rarely  just post some one else’s stuff outright, but this column by Ted Rall is just is beyond belief.  I’m looking forward to her comments and background work over on The Confluence later, hopefully, today.[UPDATE:  LINK] But right now, I’m pretty speechless.  Let’s just file this under Buyer’s Remorse.  Ted, talk to me, why didn’t you do your homework earlier now that we’re stuck with him? We couldn’t even get Bush impeached and we still can’t get his war criminal cabinet investigated and there’s a majority of Dems in Congress?  You think any one’s going to seriously discuss resignation with  Joe Biden and Nancy Pelosi on the Flight Deck?

Published on Thursday, May 28, 2009 by TedRall.com

An Early Call for Obama’s Resignation

With Democrats Like Him, Who Needs Dictators?

by Ted Rall

We expected broken promises. But the gap between the soaring expectations that accompanied Barack Obama’s inauguration and his wretched performance is the broadest such chasm in recent historical memory. This guy makes Bill Clinton look like a paragon of integrity and follow-through.

From healthcare to torture to the economy to war, Obama has reneged on pledges real and implied. So timid and so owned is he that he trembles in fear of offending, of all things, the government of Turkey. Obama has officially reneged on his campaign promise to acknowledge the Armenian genocide. When a president doesn’t have the ‘nads to annoy the Turks, why does he bother to show up for work in the morning?

Obama is useless. Worse than that, he’s dangerous. Which is why, if he has any patriotism left after the thousands of meetings he has sat through with corporate contributors, blood-sucking lobbyists and corrupt politicians, he ought to step down now–before he drags us further into the abyss.

I refer here to Obama’s plan for “preventive detentions.” If a cop or other government official thinks you might want to commit a crime someday, you could be held in “prolonged detention.” Reports in U.S. state-controlled media imply that Obama’s shocking new policy would only apply to Islamic terrorists (or, in this case, wannabe Islamic terrorists, and also kinda-sorta-maybe-thinking-about-terrorism dudes). As if that made it OK.
In practice, Obama wants to let government goons snatch you, me and anyone else they deem annoying off the street.

Preventive detention is the classic defining characteristic of a military dictatorship. Because dictatorial regimes rely on fear rather than consensus, their priority is self-preservation rather than improving their people’s lives. They worry obsessively over the one thing they can’t control, what Orwell called “thoughtcrime”–contempt for rulers that might someday translate to direct action.

Locking up people who haven’t done anything wrong is worse than un-American and a violent attack on the most basic principles of Western jurisprudence. It is contrary to the most essential notion of human decency. That anyone has ever been subjected to “preventive detention” is an outrage. That the President of the United States, a man who won an election because he promised to elevate our moral and political discourse, would even entertain such a revolting idea offends the idea of civilization itself.

Obama is cute. He is charming. But there is something rotten inside him. Unlike the Republicans who backed Bush, I won’t follow a terrible leader just because I voted for him. Obama has revealed himself. He is a monster, and he should remove himself from power.

“Prolonged detention,” reported The New York Times, would be inflicted upon “terrorism suspects who cannot be tried.”

“Cannot be tried.” Interesting choice of words.

Any “terrorism suspect” (can you be a suspect if you haven’t been charged with a crime?) can be tried. Anyone can be tried for anything. At this writing, a Somali child is sitting in a prison in New York, charged with piracy in the Indian Ocean, where the U.S. has no jurisdiction. Anyone can be tried. Why is it, exactly, that some prisoners “cannot be tried”?

The Old Grey Lady explains why Obama wants this “entirely new chapter in American law” in a boring little sentence buried a couple past the jump and a couple of hundred words down page A16: “Yet another question is what to do with the most problematic group of Guantánamo detainees: those who pose a national security threat but cannot be prosecuted, either for lack of evidence or because evidence is tainted.”

In democracies with functioning legal systems, it is assumed that people against whom there is a “lack of evidence” are innocent. They walk free. In countries where the rule of law prevails, in places blessedly free of fearful leaders whose only concern is staying in power, “tainted evidence” is no evidence at all. If you can’t prove that a defendant committed a crime–an actual crime, not a thoughtcrime–in a fair trial, you release him and apologize to the judge and jury for wasting their time.

It is amazing and incredible, after eight years of Bush’s lawless behavior, to have to still have to explain these things. For that reason alone, Obama should resign.
© 2009 Ted Rall

Ted Rall is the author of the new book “Silk Road to Ruin: Is Central Asia the New Middle East?,” an in-depth prose and graphic novel analysis of America’s next big foreign policy challenge.