Well, today’s the kind’ve day that makes me want to hide under the covers and have my mother do all my laundry and cooking. Well, actually my Dad used to do all the cooking but you know what I mean. It’s been like that for at least a few days as my car’s battery gave out in a very inconvenient location on Thursday night and my bills are bigger than my latest paycheck. A lot of my ennui and accompanying stress has to do with the uberhype of the 10 year anniversary of Hurricane Katrina which for a lot of us is an ongoing process of things becoming more undone than they were before.
Then, there’s just the constant barrage of news–none of which is particularly good–which includes ISIS destroying an ancient wonder. You know what an armchair archaeology buff I am. It’s just so easy to deal with dead civilizations rather than live ones. Trump continues to belittle any one in his path, and every one in the Republican primary is unleashing misogyny and racism. I’m going to focus on the racism today because I think both BB and JJ have given the current misogyny binge complete justice.
My friend Peter has actually written exactly what I’m feeling on this dreadful week where they’re actually pulling out parades and doing “resilience tours” to hype the city and its survival. Like I said, we may have survived Katrina, but I still have my doubts about our surviving the hipsters, the gentrification, and our elected overseers who have forced us to privatize things that weren’t working before but now are worse and to capitalize on things that turn us into a Disaster Minstrel Show. Again, this is not my writing but Peter’s but I could’ve written it word for word except I obviously don’t have his wife!
I am dreading the influx of disaster tourists who will surely be showing up in town this week. Some of them will be sincerely motivated and others will be of the “I volunteered once with Habitat for Humanity after Katrina so I know what it was like” variety. No, you don’t. You don’t know what it’s like to be barred from your home for 6 weeks and have to sneak in like Dr. A and I did. You don’t know what it’s like to have a bad case of survivor’s guilt because you didn’t fare as badly as other people in town. You don’t know what it’s like to have to re-tell your “Katrina story” over and over again. You don’t know what it’s like to be having dinner and have do-gooders burst in to save your pets because you didn’t, or couldn’t, wash the marks off your front door. Actually, neither do I but it happened to some friends of mine. It gives a whole new meaning to the phrase putting on the dog…
The aftermath of the storm was a very painful period in the lives of New Orleanians. We’ve lived it day-in and day-out for 10 years at varying levels of intensity. That’s why I’m not enthusiastic about rehashing those days regardless of whether it’s done by resilience tour types or the krewe of “we’ve gone to hell in a designer handbag.” I wish they’d all piss off and leave me alone. I’m not the only one who feels this way.
Yes. I feel that way. Piss off and leave me alone. Unfortunately, my neighborhood has turned into the mini-Quarter and I can’t even walk the dog around the block or have a beer without either bumping into seven bridesmaids giggling, six film crews taping, and five fucking Air BnB parasites.
This headline from WAPO actually made me scream: A ‘resilience lab’. They’ve obviously bought into the Mayor’s hype. This is the paragraph that’s described my reality. Every day I walk out of my house and feel like screaming “WTF are you doing here? Why don’t you go back to the hell realm you came from instead of bringing it here to me?” No east coast newspaper article on New Orleans is complete these days without telling people that the place to be is my freaking neighborhood, the Bywater. I have fewer and fewer neighbors all the time. My neighborhood has been completely overrun with people hoping to redefine and cash in on cool.
He smiled at first. It looked so charming, all those people driving slowly down Burgundy Street through the Faubourg Marigny and Bywater neighborhoods, pointing cameras.
Then it dawned on Keith Weldon Medley: These folks weren’t tourists or architecture buffs. They were shoppers. And on their shopping list was almost everything that could be had in these neighborhoods, a collection of Creole cottages, shotgun doubles, warehouses and small manufacturers at a humpback bend of the Mississippi River.
In the evolution of post-Katrina New Orleans, few phenomena have been more striking than the dramatic demographic shift of places such as Bywater from majority black to majority white. One census block group in Bywater dropped from 51 percent African American before Katrina to just 17 percent afterward; the largest went from 63 percent to 32, according to a Washington Post analysis of U.S. census data.
“You saw all these white people. Obviously they were displacing black people who were here before,” said Medley, a historian who lives in the house where he grew up in the Marigny.
My daily mantra is “I see fucking stupid White People.”
So, I really don’t intend for this to be my Katrina post. I’ve been there and done that. Let me post a few more things that are pissing me off today.
There’s an obvious asset bubble bubbling away here so the market’s correcting and the Fed is going to start bringing up interest rates. This blog has an interesting take on what’s going on which is particularly relevant to my field of research as a currency bloc and international economist.
Global stock markets are in a 2008ish kind of crash today and I really don’t much time to write this, but I just want to share my take on it.
To me this is fundamentally about the in-optimal currency union between the US and China. From 1995 until 2005 the Chinese renminbi was more or less completely pegged to the US dollar and then from 2005 until recently the People’s Bank of China implemented a gradual managed appreciation of RMB against the dollar.
This was going well as long as supply side factors – the opening of the Chinese economy and the catching up process – helped Chinese growth.
Hence, China went through one long continues positive supply shock that lasted from the mid-1990s and until 2006 when Chinese trend growth started to slow. With a pegged exchange rate a positive supply causes areal appreciation of the currency. However, as RMB has been (quasi)pegged to the dollar this appreciation had to happen through domestic monetary easing and higher inflation and higher nominal GDP growth. This process was accelerated when China joined WTO in 2001.
As a consequence of the dollar peg and the long, gradual positive supply shock Chinese nominal GDP growth accelerated dramatically from 2000 until 2008.
However, underlying something was happening – Chinese trend growth was slowing due to negative supply side headwinds primarily less catch-up potential and the beginning impact of negative labour force growth and the financial markets have long ago realized that Chinese potential growth is going to slow rather dramatically in the coming decades.
As a consequence the potential for real appreciation of the renminbi is much smaller. In fact there might be good arguments for real depreciation as Chinese growth is fast falling below trend growth, while trend itself is slowing.
The market has rebounded but the financial markets are obviously still shaky. China is the world’s largest economy now so anything that happens there is bound to ripple around the world.
The global whiplash underscored investors’ shaken confidence in China’s slowing economy and central bank. The world’s second-largest economy is now reeling over what China’s state media is calling “Black Monday,” during which its markets just recorded their biggest one-day nosedive in eight years.
But the mid-morning bounce off deep trading lows led some analysts to question whether financial markets had already finished their fall. Tech giant Apple, which begun the morning down 13 percent and dipping below $100, was trading 2 percent higher by the afternoon, at about $107.
The dismal opening marked a worrying continuation of last week’s free fall. The Dow’s blue-chip index plunged more than 500 points on Friday, capping its worst week since 2011 and entering what Wall Street calls a correction, having tumbled 10 percent from its May peak.
The sell-off bruised every industry, wiping out gains in rapid order after a year of mostly steady trading. Some of America’s biggest companies shed tens of billions of dollars in market value in only a few days, and the markets’ early gains have yet to restore those losses.
S&P 500 companies lost more than $1 trillion in market value last week, and the Dow and other indices are on track to record their dreariest month since February 2009.
On Friday, China reported its worst manufacturing results since the global financial crisis, following shortly after Beijing earlier this month surprised investors by announcing it would devalue the nation’s currency.
China’s benchmark Shanghai Composite index has fallen by nearly 40 percent since June, after soaring more than 140 percent last year. Markets in Europe also plummeted, and Asian shares on Monday hit a three-year low.
Economist gadfly and miserable human being Larry Summers is pearl clutching about the rate hikes. He seems to be on a search to be relevant again but on a very wrong path. This article alone ought to make you very glad that he’s not the Fed Chairman since he seems completely oblivious to the asset bubbles that I see in assets around the country including houses once again.
Like most major central banks the Fed has put its price stability objective into practice by adopting a 2 per cent inflation target. The biggest risk is that inflation will be lower than this — a risk that would be exacerbated by tightening policy. More than half the components of the consumer price index have declined in the past six months — the first time this has happened in more than a decade. CPI inflation, which excludes volatile energy and food prices and difficult-to-measure housing, is less than 1 per cent. Market-based measures of expectations suggest that, over the next 10 years, inflation will be well under 2 per cent. If the currencies of China and other emerging markets depreciate further, US inflation will be even more subdued.
Tightening policy will adversely affect employment levels because higher interest rates make holding on to cash more attractive than investing it. Higher interest rates will also increase the value of the dollar, making US producers less competitive and pressuring the economies of our trading partners.
Please check out housing and stock prices Lala and then try again.
Republicans continue to show they have no idea about the reality of black people in this country. Trump attacked Martin O’Malley for sensitivity to the Black Lives Matter Campaign.
Appearing on Fox News over the weekend, Donald Trump admitted to being completely ignorant about the Black Lives Matter movement. “I know nothing about it,” the billionaire real estate developer said.
Of course, his lack of knowledge didn’t prevent him from harshly criticizing the effort. Trump said that he’s “seeing lot of bad stuff about it right now.” He said Martin O’Malley, a contender for the Democratic nomination, was a “disgusting little weak pathetic baby” for apologizing to Black Lives Matter activists earlier this year.
Martin Luther King III, the son of the late civil rights leader, said he was “perplexed” by GOP presidential hopeful Mike Huckabee’s comments last week suggesting that his father would be “appalled” by the Black Lives Matter movement.
“I think dad would be very proud of young people standing up to promote truth, justice and equality,” King said during an interview on SiriusXM radio. “I was perplexed by the comments, but people attempt to use dad for everything.”
King’s comments come in response to a CNN interview last week in which the former Arkansas governor spoke out against the Black Lives Matter movement, saying racism is “more of a sin problem than a skin problem.”
If you look at the picture of flooded New Orleans and the view over the flooded lower ninth ward towards city, you’ll see a cluster of white tallish buildings sitting right on the river in the middle of that photo. Just a hair to the right is where my house still stands and where I’m there right now with a pillow pulled over my head trying to block out the world of adults. I don’t want to be one of them at the moment.
What’s on your reading and blogging list today?
Yesterday, presumed Republican Presidential standard bearer Mitt Romney managed a stunning quadruple-gaffe. In one “lecture” at Ohio’s Otterbein University he demonstrated his ignorance about ordinary American families, his disdain for working people, and his cluelessness about the American economy. On top of that, he managed to put his audience to sleep! Watch the video and note the dozing students behind Romney:
Accusing the president of attacking successful Americans, Romney urged students to borrow money from their parents — as John did — if they need to do so to succeed in starting their own businesses.
“Even now, I believe you’re watching a president who is trying to deflect and divert from his record by trying to find ways to, if you will, attack fellow Americans, between rich and poor, and other dimensions,” said Romney. “This kind of divisiveness, this attack of success, is very different than what we’ve seen in our country’s history.”
“We’ve always encouraged young people, take a shot, go for it, take a risk, get the education, borrow money if you have to from your parents, start a business,” he said.
Of course! Because everyone has parents with an extra $25,000 lying around. Why didn’t I think of that? It’s a simple answer to the economic crisis–stop attacking rich people and borrow money from your rich parents instead.
And be like Jimmy John’s–a company cited for illegal labor practices! Great idea!
A National Labor Relations Board administrative law judge has ruled six former Minneapolis Jimmy John’s sandwich shop employees must be re-hired and paid back wages.
The workers in question said if they called in sick and couldn’t find replacements for their shifts they risked being fired. So, they started warning Jimmy John’s customers that they could be eating sandwiches made by under-the-weather sandwich makers….
Davis Ritsema, one of the fired workers, explained how sick leave policy challenge began. “One day I was coughing and had a high temperature, but I felt pressured to work.”
Mike Wilkow, another former Jimmy John’s worker, added, “I was vomiting and handling sandwiches. They made me stay until the end of my shift.”
Yes, take Mitt Romney’s advice: borrow money from your wealthy parents, hire minimum-wage workers and deny them sick leave. That’ll help the economy recover!
Romney also attacked Obama’s economic stimulus, apparently unaware that Otterbein University received more than $80,000 in stimulus funds used for a federal work-study program.
ROMNEY: Then there was the stimulus itself. $787 billion of borrowing. It could have been entirely focused on getting getting the private sector to buy capital equipment, for instance. That puts people to work. Or to hire people. Instead, it primary [sic] protected people in the governmental sector, which is probably the sector that should have been shrinking.
Of course, as Dr. Dakinikat has repeatedly explained, businesses aren’t going to invest capital in equipment to produce products when Americans have so little money to spend. Furthermore, Ohio college are now suffering the loss of stimulus funds, because Governor Kasich, who accompanied Romney at Otterbein, hasn’t done anything to replace them.
What’s on your mind this lovely Saturday morning?
I have to admit, I’m getting really excited by the way the #OccupyWallStreet movement is taking off. I just got home and turned on MSNBC to find that they are covering the Wall Street protests live this afternoon. They have a number of network personnel on the ground, including Dylan Ratigan. And get this: even Beltway Bob is there! That has to be sign that the mainstream Villagers are taking note.
Right now Harrison Schultz, a spokesman for the protesters is on, and he just said, “I call this a revolution. No one is organizing it. It’s just happening.” He says the media is obsolete. The media thinks they are driving people to the protest, but that’s not true. If he would in charge of a major media outlet, he would be nervous now, because this would be happening whether the mainstream media paid attention or not. He says no one knows what is going to happen or where this will go.
The union march will take place at 4:30 this afternoon, according to MSNBC, but ABC says 3PM. If you have access to MSNBC right now, please watch with us and let us know if anything is happening in your area. Awhile ago, they put up a map to show where all the protests are now, and they were in so many states! I’ll see if I can find the map and post it. Meanwhile, here is a little about what we can expect this afternoon.
The cavalry has arrived in Lower Manhattan. Representatives from no fewer than 15 of the country’s largest labor unions will join the Occupy Wall Street protesters for a mass rally and march today in New York City.
The AFL-CIO, United Auto Workers, and Transit Workers’ Union are among the groups expected to stand in solidarity with the hundreds of mostly young men and women who have spent the better part of three weeks sleeping, eating, and organizing from Zuccotti Square.
Their arrival is being touted as a watershed moment for the “Occupy” movement, which has now seen copycat protests spring up across the country. And while the specific demands of the “occupiers” remain wide-ranging, the presence of the unions – implicitly inclined to making more direct demands – may sharpen their focus.
Today’s action is scheduled to begin at 3 p.m. ET, when the protesters in Zuccotti Square march approximately one mile north to Foley Square, where they will be met by community and labor leaders. Then, at 4:30 p.m., they plan to match together back down toward Wall Street. They do not yet have a city-issued permit for the gathering, but are now pursuing one.
ABC is anticipating more arrests today, but on MSNBC, a spokesman said the unions got a permit for today’s march. Furthermore, if NYC chooses to try to break up the protests today, it will only help the growth of this movement.
Here’s a report from Democracy Now today:
UPDATE: MSNBC has moved on to other things for now. But the Guardian has a live blog. It figures we have to go to a British newspaper to find out what’s happening in our own country.
As I’m writing this, the Supreme Court is considering whether to stay Troy Davis’ execution. I’m following a blog on NPR. From NPR at 9:04PM Wednesday Night:
The Atlanta Journal Constitution reports that more than a dozen Georgia state police in riot gear have moved into the area outside of the prison. “They were met by choruses of ‘Shame on you’ from the protesters,” reports the AJC.
Larry Cox, the executive director of Amnesty International, which has led protests in support of Davis, told Democracy Now! they don’t know much about what’s going on. He said they’ve met with protesters to try to prepare them for bad news, he said, so they could react properly and within the peaceful spirit of the campaign.
“All we can do is wait and pray,” said Cox.
At The Nation, Richard Kim offers some background on the SCOTUS justices and their past statements about the death penalty.
It does seem that Georgia’s government is determined to kill Davis tonight. Earlier today Davis was refused an opportunity to take a polygraph.
Sadly, everything I wrote above is now moot. I’ve just heard (10:24PM) that the U.S. Supreme Court has rejected Davis’ stay request. What a sad day for the so-called justice system. Texas killed another man tonight and Georgia may yet follow suit.
UPDATE: Troy Davis died last night at 11:08PM. From CBS News: Troy Davis executed, supporters cry injustice
Strapped to a gurney in Georgia’s death chamber, Troy Davis lifted his head and declared one last time that he did not kill police officer Mark MacPhail. Just a few feet away behind a glass window, MacPhail’s son and brother watched in silence.
Outside the prison, a crowd of more than 500 demonstrators cried, hugged, prayed and held candles. They represented hundreds of thousands of supporters worldwide who took up the anti-death penalty cause as Davis’ final days ticked away.
“I am innocent,” Davis said moments before he was executed Wednesday night. “All I can ask … is that you look deeper into this case so that you really can finally see the truth. I ask my family and friends to continue to fight this fight.”
Prosecutors and MacPhail’s family said justice had finally been served.
“It harkens back to some ugly days in the history of this state,” said the Rev. Raphael Warnock of Ebenezer Baptist Church, who visited Mr. Davis on Monday.
Mr. Davis remained defiant at the end, according to reporters who witnessed his death. He looked directly at the members of the family of Mark MacPhail, the officer he was convicted of killing, and told them they had the wrong man.
“I did not personally kill your son, father, brother,” he said. “All I can ask is that you look deeper into this case so you really can finally see the truth.”
He then told his supporters and family to “keep the faith” and said to prison personnel, “May God have mercy on your souls; may God bless your souls.”
One of the witnesses, a radio reporter from WSB in Atlanta, said it appeared that the MacPhail family “seemed to get some satisfaction” from the execution.
How can anyone “get satisfaction” when the wrong man may have been murdered by the state? I just don’t understand that. In my opinion, the U.S. cannot be considered a civilized or even moral country as long as we murder people in the name of the state, not to mention in the name of profit in our so-called “health care system.” In this country, it is still a crime to be poor, to be black, to be “illegal,” to be muslim, to be different.
“The U.S. justice system was shaken to its core as Georgia executed a person who may well be innocent. Killing a man under this enormous cloud of doubt is horrific and amounts to a catastrophic failure of the justice system. While many courts examined this case, the march to the death chamber only slowed, but never stopped. Justice may be blind; but in this case, the justice system was blind to the facts.
“The state of Georgia has proven that the death penalty is too great a power to give to the government. Human institutions are prone to bias and error and cannot be entrusted with this God-like power. The death penalty is a human rights violation whether given to the guilty or the innocent, and it must be abolished.
“Our hearts are heavy, but we have not lost our spirit of defiance. Millions of people around the world now know of Troy Davis and see the fallibility of the U.S. justice system. As this case has captured the American conscience and increased opposition to the death penalty, Amnesty International will build on this momentum to end this unjust practice.”
In other news, this story from Mexico is unbelievable. I hope this isn't what the U.S. has to look forward to as we sink into third world status: 35 bodies dumped in Mexican city as president begins effort to woo tourists
As Mexican President Felipe Calderon was unveiling a new campaign and TV program Tuesday to draw wary tourists back to his country, a gang dumped 35 bodies at a busy intersection in the tourist zone in the coastal city of Veracruz….
The images from the travel television program, called “Mexico: The Royal Tour” — clips of gray whales, Mayan pyramids and glasses of amber tequila — clashed with shaky videos captured by cellphone cameras of panicked commuters, wailing police vehicles and half-naked bodies dumped on an underpass near the Veracruz beaches.
Authorities in Veracruz said the 35 bodies included 24 men and 11 women. They quickly tried to calm the public — and foreign visitors — by saying that most of the dead were criminals who were killed by a warring drug cartel.
That wouldn’t calm me one bit!
A couple of new polls have come out that show Obama continue to loose ground in important areas. A new Washington Post-ABC News Poll show his favorability ratings are dropping with African Americans.
New cracks have begun to show in President Obama’s support amongst African Americans, who have been his strongest supporters. Five months ago, 83 percent of African Americans held “strongly favorable” views of Obama, but in a new Washington Post-ABC news poll that number has dropped to 58 percent. That drop is similar to slipping support for Obama among all groups.
“There is a certain amount of racial loyalty and party loyalty, but eventually that was going to have to weaken,” said Andra Gillespie, a political scientist at Emory University, who studies African Americans. “It’s understandable given the economy.”
African Americans have historically correlated approval ratings of the president to the unemployment rate, she said. The slip in the strongly favorable rating continues the decline Obama has seen among all groups, but black voters have been his staunchest supporters. Overall, they still hold a generally favorable view of the president with 86 percent saying they view him at least somewhat favorably.
Gillespie’s view that the decline is tied to the disproportionately high jobless rate faced by African Americans correlates with the drop in their view of Obama’s handling of the economy. In July, only 54 percent of blacks said they thought Obama’s policies were making the economy better compared with 77 percent the previous year.
And a new Gallup poll shows that a “slight majority” of Americans blame Obama for the state of the economy.
A slight majority of Americans for the first time blame President Obama either a great deal (24%) or a moderate amount (29%) for the nation’s economic problems. However, Americans continue to blame former President George W. Bush more. Nearly 7 in 10 blame Bush a great deal (36%) or a moderate amount (33%).
Gallup found a substantially wider gap in public perceptions of how much responsibility Bush and Obama each bore for the economy when it first asked the question in July 2009, the sixth month of Obama’s presidency. That narrowed by March 2010, caused mainly by a jump in the percentage blaming Obama a great deal or moderate amount, and has since changed relatively little. However, the results from a new Sept. 15-18 USA Today/Gallup poll are the first showing a majority of Americans, 53%, assigning significant blame to Obama. Forty-seven percent still say he is “not much” (27%) or “not at all” (20%) to blame.
I managed to find a little humor for you. Elizabeth Warren has gotten quite a bump after her announcement that she’s running for the Senate in Massachusetts. Although Scott Brown’s campaign claims he’s not concerned, a little birdie overheard Brown talking about it on the phone and then told Talking Points Memo.
A Hill staffer, who spoke with TPM by phone, sends this dispatch from the Senate side in the wake of today’s PPP poll showing former White House financial reform adviser Elizabeth Warren leading Sen. Scott Brown (R-MA):
“Just walked passed Senator Brown’s office and in the hallway was the man himself, lamenting into his cell phone, ‘I don’t understand how she can be down 20 points one week and is now up 2. What is going on?’”
Our tipster describes the scene:
Was heading to a meeting after just having read your reporting on the new poll. Was just about to walk by Senator Brown’s personal office when he walked out of the main door of his office, cell phone in hand. He was mid-conversation but was responding to something on the other line with the line I reported. Was kind of dumbfounded to hear that kind of candor in a very public hallway. I’m guessing he realized that too, because he then looked over his shoulder, saw me, and hurriedly entered a side down to his office down the hall.
As a Massachusetts voter, I can’t tell you how happy it makes me to hear that Pretty Boy Brown is a little freaked out by the competition.
That’s it for me. What are you reading and blogging about today?
Lots of liberal groups are calling for Elizabeth Warren to run for the Senate in Massachusetts against Senator Scott Brown. But why not challenge Obama instead? Warren has nothing to lose–Obama already hates her guts and has publicly humiliated her multiple times. What more can he do to her? Running against Obama would give Warren a chance to turn the tables and represent the American people against the top enforcer of the oligarchy.
Today Yves Smith at Naked Capitalism presented a thoughtful, well-argued case for why it would be much better for Warren and for liberals who are disgusted with Obama if she ran for President rather than Senator. It’s a fairly lengthy post and very meaty, so you should read the whole thing.
Yves argues that even though Warren wouldn’t win, she could help elevate the national discourse. If she were running against Obama and debating him, the media would have to cover it, and some of her ideas might make it through the media filter.
And just imagine the debates! Warren would wipe the floor with Obama, exposing his lack of moral values and his pitiful ignorance of basic economics. Obama would be horrified to once again have to compete with a brilliant, competent woman. He might even be forced to sneakily use his middle finger again or pull out his tired sexist remarks. This time more people might notice, now that the koolaid has worn off for so many former Obots.
One quibble I have with Yves is her argument that Warren is “a Reagan-level Great Communicator.” Please. Reagan couldn’t speak off-the-cuff much better than Obama. Did you ever watch one of his press conferences? But Yves is young, and probably grew up under Reagan. I guess I can forgive her for that one. She points out that
unlike Obama, a patrician wannabe who sees Reagan as a role model, she taps into deeply rooted traditional American values, that of a just society. Obama, by contrast, exploited the intense frustration with eight years of misrule by Bush the Second, and his liberal posturing was merely a market positioning exercise, to further differentiate him from Brand Republican.
Her position, which sounds dogmatic leftie to those lacking historical perspective, would have been dead center circa the early to mid 1980s, a Javits/Rockefeller Republican or a pretty tame Democrat of that era.
Hmmm…not quite sure I buy that either, but whatever. She’s right that Warren is no lefty. She’s simply an honest person who has studied what is happening to the American middle class and has the decency to prefer trying to change things to trying to cash in on the greed of bankers.
But here’s the best reason for Warren to run:
Warren also stands for a second set of ideas, that of competence and accountability in government. Not only did she build a major organization in an impressively short period of time, but she understands the importance of what we call in the consulting world “deliverables”, that is, providing tangible evidence of progress. She got various government agencies and banks to agree on a simplified mortgage disclosure form, a “to do” on the banking officialdom’s list that had somehow been too complicated to get done until Warren took it on. And this isn’t just good for consumers, it will also lower costs to banks.
By contrast, not only did Obama make a spectacular set of campaign promises that he failed to honor, he is completely unapologetic about those lies. While there is, sadly, a certain amount of misrepresentation that is considered normal among politicians, Obama’s looks to have set a new standard.
Yes, Warren is competent and efficient–she gets things done. She identifies a problem, and she attacks it doggedly–and she’s tough as nails. She has taken more abuse in the past few years and most people face in a lifetime. And she’s come through unbroken and unbowed.
Yves points out that in comparison to what she might accomplish with a failed primary campaign for President, Warren’s chances of effecting real change in the Senate would be slim to none. As we’ve seen recently, the Senate is utterly dysfunctional and filled with people who are completely out of touch with what is really happening in the country. If Warren tried to actually accomplish something as a freshman Senator, she’d be slapped down in no time flat.
I must say I like this idea. Just to get you thinking about it, here are a couple of videos of Warren making Timmy Geither look like a guilty schoolboy.
Our economy continues to scuttle across a bottom set by the huge drop in performance during the Great Recession. This economist was not surprised by the lackluster GDP report released today. No one has used the correct fiscal policy prescription in this country since 1999. The current batch of Washington nimrods are going to set us at a new low shortly. We’ll be lucky to see nasty numbers like these a year from now. It’s as if tanking the economy is job 1 now.
Gross domestic product climbed at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was less than earlier estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, rose 0.1 percent.
Treasuries rose as the report dimmed prospects for faster growth in the rest of 2011. The faltering economy may get another blow from spending cuts being negotiated in Congress, keeping pressure on Federal Reserve Chairman Ben S. Bernanke to hold interest rates near zero.
“The second-half rebound is melting away,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, the only forecaster polled to correctly estimate the gain in GDP. “It’s a very, very difficult situation for policy makers. The Fed could give a pretty strong signal that they are not likely to move on interest rates for a very long time.”
The yield on the benchmark 10-year note decreased to 2.85 percent at 1:22 p.m. in New York from 2.95 percent late yesterday. Stocks pared earlier losses on signs that House Speaker John Boehner’s plan to raise the debt ceiling was gaining support. The Standard & Poor’s 500 Index fell 0.3 percent to 1,296.42 after falling as much as 1.4 percent.
Former Labor Secretary Robert Reich tells it like it is in a post that might as well be entitled “It’s the jobs, stupid”. Too bad he’s not up for the Treasury position now occupied by Secretary Slave to Investment Banks. There’s a false equivalency being spread about raising the debt ceiling and increasing the deficit that’s really hampering policy discourse right now. The two things aren’t the same. The debt is the amount we owe and it builds each year when there is a deficit or when interest accumulates. The deficit is a shortage in one year’s budget. The only real crisis we have right now is a jobs crisis and a complete lack of demand. Again, no business person in their right mind is going to create anything if there’s no customers. Oh, there’s also a confederacy of dunces in the US House of Representatives. But, I won’t go there right now.
Get it? We’re really in a “jobs and growth” crisis – not a budget crisis.
And the best way to get jobs and growth back is for the federal government to spend more right now, not less – for example, by exempting the first $20,000 of income from payroll taxes this year and next, recreating a WPA and Civilian Conservation Corps, creating an infrastructure bank, providing tax incentives for small businesses to hire, expanding the Earned Income Tax Credit, and so on.
But what happens next week if Congress can’t or won’t deliver the President a bill to raise the debt ceiling? Remember: This is all politics, mixed in with legal technicalities. Economics has nothing to do with it.
One possibility, therefore, is for the Treasury to keep paying the nation’s bills regardless. It would continue to issue Treasury bills, which are our nation’s IOUs. When those IOUs are cashed at the Federal Reserve Board, the Fed would do what it has always done: Honor them.
How long could this go on without the debt ceiling being lifted? That’s a legal question. Republicans in Congress could mount a legal challenge, but no court in its right mind would stop the Fed from honoring the full faith and credit of the United States.
One of the biggest right wing memes that drives me crazy is that the economy is bad because we have too much taxes still and that the President’s stimulus didn’t work because it was worthless spending. I knew it wouldn’t do much to stimulate the economy simply because it didn’t take advantage of the government spending multiplier in key areas and wasn’t big enough. Also, it was the Biggest Tax Cut Ever which rarely works as efficiently as direct government spending to get consumption going again. So why are so many idiots arguing that more of the same tax cuts are going to improve the economy and cutting all levels of government spending is considered confidence building when the government spending multiplier will just push recessionary momentum? You got me. It’s insanity.
So, what happens if these debt ceilings talk fail? Well, first, every single financial asset, liability, and contract will reprice all over the world. Most of them will reprice in a bad way that will hamper economies every where. Every business project will be evaluated using a risk free rate that will now be higher and will not be considered risk free any more. That means many projects will now be rejected so expansions, new jobs, or anything like that will be rejected. Remember, this is not because we can’t pay those bills, it’s because a few idiots refuse to pay them. Second, the world will continue to step away from the dollar. Third, there will be strong recessionary pressures. It’s not good, folks. As these recent GDP figures show, we’re far from out of the impact of the last financial shock.
But what if all those options failed? What would be the consequence of even a notional default? The IMF has talked of a global recession if there was a loss of confidence in US solvency although it’s not clear that a failure to roll over debt for a few days would qualify for that description.
Having seen what happened with Lehman’s default, the main worry would be a freeze in the markets. Take the finances of banks, for example. Many use Treasury bonds as the risk-free asset for capital purposes. As Capital Economics points out
“Government debt is only automatically 0% risk-weighted for banks under Basel II if it is rated AA- or higher (although regulators can make exceptions for domestic government debt issued in local currency). In principle, therefore, financial institutions would face significantly higher capital charges in the event of a US government default.In practice, it seems likely that the regulators would move quickly to waive the rules. But there might be a few hairy moments while they did. And what about money-market funds? Having been burned by the credit crunch, many have opted for the safe haven of US Treasury bills. Perhaps they could roll over those bills into some form of IOU from the government. But if investors demanded their money back at a time when Treasury bills were illiquid, money-market funds might be forced to suspend resumptions or “break the buck”. Then there is the repo market, widely used by financial institutions to raise money; Treasury securities are used as collateral for such borrowing.”
Standard & Poor’s has considered this scenario and suggests that
“Failure to pay off maturing debt or missing interest payments (approximately $62 billion of interest is payable on Aug. 15) would constitute a selective default pursuant to our criteria, and Standard & Poor’s expects it would lower the sovereign rating to ‘SD’. Even if the Fed and other central banks managed to keep the financial system functioning, we expect that markets around the world would be severely damaged. In such a hypothetical scenario, we expect that equity markets would generally plunge, borrowing costs and interbank lending rates would soar, and corporate credit markets would be closed to all but the highest quality issuers. We envisage that consumers and businesses would likely stop spending on all but essential items, and the value of the dollar would drop by 10% or more against other major currencies. With the dollar heading lower, investors would likely look for hard assets like oil and other commodities, driving prices higher.Given the fragility of the economic recovery, this is an incredible risk to contemplate. It is also worth noting that, even a freeze on government spending that stopped short of a default, would have a significant impact on demand.”
I still can’t believe that a few people are willing to tank the economy for failed economic hypotheses. It’s as if everything we’ve learned over the past 70 years has been completely thrown to the wind and we’re being run by the myth of Reagan’s ghost. I say myth because what they’re going on didn’t even happen on his watch. He was responsible for the biggest single tax increase in history and was responsible for a lot of the debt they’re whining about today. Speaking of Reagan, one of his economists–Bruce Bartlett–has an excellent analytical piece up on how the Debt Crisis is being Fueled by Obama’s weak negotiations. It’s worth a read.
Unfortunately, Obama is really too young to have the kind of experience that previous presidents like Reagan brought to the White House in terms of understanding intransigent enemies and how to deal with them. Consequently, Obama has really been caught flat-footed by the Tea Party era Republican Party. He believed it would respond positively if he offered it half a loaf on just about every issue.
For example, some 40 percent of the 2009 stimulus legislation consisted of tax cuts even though his economic advisers knew that they would have almost no stimulative effect. But Obama viewed them as an important concession to Republicans. Yet despite total rejection of his stimulus package by the GOP, Obama kept the tax cuts rather than reprogramming the money into more effective programs such as state aid or public works.
Nevertheless, Obama offered Republicans another half-loaf by putting forward a health reform plan almost identical to those that they and conservative groups such as the Heritage Foundation had proposedin the 1990s. Obama’s offer was summarily rejected and Republicans suddenly decided that the individual mandate, which previously had been at the core of their own health reform plans, was unconstitutional.
Now we are in the midst of a debt crisis that stems largely from Obama’s inability to accept the intransigence of his political opponents. Last December, he caved in to Republicans by supporting extension of the Bush tax cuts even though there is no evidence that they have done anything other than increase the deficit. There were those who told Obama that he ought to include an increase in the debt limit, but he rejected that idea, believing that Republicans would behave like responsible adults and raise the debt limit just as they did routinely when their party held the White House.
I join Bartlett, former President Clinton, and others in begging the President to invoke the 14th amendment. Then, he should find some economics advisers who know what they are doing and listen to them for a change.