The U.S. Department of Justice filed an antitrust lawsuit against AT&T on Wednesday seeking to block its $39 billion merger with T-Mobile.This proposed merger is clearly anti-competitive and not in the best interest of American wireless customers.
The merger would create the largest wireless company in the United States, combining AT&T's 98 million customers with T-Mobile's 34 million users, for a total of 130 million subscribers. AT&T is currently the second-largest wireless company by number of subscribers, and T-Mobile is fourth.
The DOJ said the merger would lead to a situation in which just two companies -- the AT&T-T-Mobile combination and Verizon Wireless -- would dominate the mobile market. The new AT&T and Verizon would account for more than two-thirds of wireless subscribers and 78% of the wireless industry's revenues.
"We feel the combination of AT&T and T-Mobile would result in tens of millions of consumers across the U.S. facing higher prices, fewer choices, and lower quality products for wireless services," James Cole, deputy attorney general, said in a press conference Wednesday.
Wednesday, August 31, 2011
Here are the thirteen elements with Lichtman's scoring:
It's quite a way in advance of the election, of course, but the Republicans' only power is their conservative and socially conservative base who will not permit their politicians to even try to run on policies which might defeat Obama. While no election can really be predicted this far in advance, something really significant would have to change to make this prediction wrong.
- Party mandate: After the midterm elections, the incumbent party holds more seats in the U.S. House of Representatives than it did after the previous midterm elections. Says Lichtman, “Even back in January 2010 when I first released my predictions, I was already counting on a significant loss.” Obama loses this key.
- Contest: There is no serious contest for the incumbent party nomination. Says Lichtman on Obama’s unchallenged status, “I never thought there would be any serious contest against Barack Obama in the Democratic primary.” Obama wins this key.
- Incumbency: The incumbent party candidate is the sitting president. Easy win here for Obama.
- Third Party: There is no significant third party challenge. Obama wins this point.
- Short term economy: The economy is not in recession during the election campaign. Here Lichtman declares an “undecided.”
- Long-term economy: Real per capita economic growth during the term equals or exceeds mean growth during the previous two terms. Says Lichtman, “I discounted long term economy against Obama. Clearly we are in a recession.” Obama loses this key. [Read: Seven Ways Obama Can Gain Credibility on Jobs.]
- Policy change: The incumbent administration effects major changes in national policy. “There have been major policy changes in this administration. We’ve seen the biggest stimulus in history and an complete overhaul of the healthcare system so I gave him policy change,” says the scholar. Another win for Obama.
- Social unrest: There is no sustained social unrest during the term. Says Lichtman, “There wasn’t any social unrest when I made my predictions for 2012 and there still isn’t.” Obama wins a fifth key here.
- Scandal: The incumbent administration is untainted by major scandal. “This administration has been squeaky clean. There’s nothing on scandal,” says Lichtman. Another Obama win.
- Foreign/military failure: The incumbent administration suffers no major failure in foreign or military affairs. Says Lichtman, “We haven’t seen any major failure that resembles something like the Bay of Pigs and don’t foresee anything.” Obama wins again.
- Foreign/military success: The incumbent administration achieves a major success in foreign or military affairs. “Since Osama bin Laden was found and killed, I think Obama has achieved military success.” Obama wins his eighth key.
- Incumbent charisma: The incumbent party candidate is charismatic or a national hero. Explains Lichtman, “I did not give President Obama the incumbent charisma key. I counted it against him. He’s really led from behind. He didn’t really take the lead in the healthcare debate, he didn’t use his speaking ability to move the American people during the recession. He’s lost his ability to connect since the 2008 election.” Obama loses this key. [See political cartoons about President Obama.]
- Challenger charisma: The challenging party candidate is not charismatic or a national hero. Says Lichtman, “We haven’t seen any candidate in the GOP who meets this criteria and probably won’t.” Obama wins, bringing his total to nine keys, three more than needed to win reelection.
Tuesday, August 30, 2011
Sunday, August 28, 2011
The heart of the Republican argument is the claim that government spending and taxation is "job-destroying" and otherwise harmful to the economy. Well, this view among Republicans (and sympathetic deficit-hawk Dems) put limits on the 2009 stimulus package and ruled out the possibility of a subsequent injection of stimulus. So if the economic disaster brought about by Bush policies wasn't proof enough, we are tragically getting another demonstration of what happens when free market fundamentalist policies win out over J.M. Keynes' time-tested, Great Depression-taming approach.The scorekeeper on this experiment can be considered to be the bond market. When the policies begin to work then businesses will begin to expand and they will need funds. Investors will invest in the companies and in the stock market rather than in the bond market. Demand for safe government bonds will drop, requiring bond issuers to offer higher interest rates.
The real problem with Republican obstructionism isn't its rigid refusal to compromise or cynicism in wishing for the president's failure. What we have here is a grand experiment for our grand debate over government expenditure, regulation and the provision of public goods, i.e. whether they are necessities or threats for the economy. We should take the GOP at Grover Norquist and Ayn Rand's word; cuts in budgets and the public sector is the job- and prosperity-creating tonic for what ails our economy. Republicans have succeeded in sidelining the government and preventing it from propping up weak demand. It's not a stretch, therefore, to say this is the Republicans' economy -- not because of George Bush, but because of Paul Ryan, Michele Bachman, John Boehner, Mitch McConnell, Rand Paul, Mitt Romney, Tim Pawlenty, the Koch Brothers, Richard Viguerie...
In other words, low bond interest rates means that the economy is still doing poorly, higher bond interest rates will indicate that the economy is improving.
The Republican led charge into cutting government spending has resulted in the lowest bond interest rates since the 1950's. The markets are speaking very loudly. Why aren't the Republicans in the Congress listening? Or do they have other purposes rather than improving the American economy?
Saturday, August 27, 2011
Essentially the Republicans are practicing a slow motion shutdown of the US government in order to prevent Obama from being able to claim any success as President. Yet even while holding the government hostage and shutting down as many government functions as they can get away with, the Republicans are trying to blame Obama for not getting things done.
The slow motion shutdown of government is an effort by the Republicans to conduct a political coup and retake the Presidency in 2012 even though the voters don't like them and disapprove of what they propose government does. Following the creation of a false crisis over the government debt that has damaged the financial markets worldwide while tying up the Congress and preventing it from acting to ameliorate the real jobs crisis. The Republicans will not permit the government they don't run to function. That is the message presented by House Majority Leader Eric Cantor When he told Brian Beutler that when Hurricane Irene hit his own Virginia Congressional District that he would hold the disaster relief that the government needs to provide hostage to force an equal amount of spending cuts from the rest of the federal budget.
So what does this have to do with the polls that show that the Republicans are unpopular but that Obama needs to lead? We know the Republicans are unpopular. THEY know they are unpopular. Why are they going out of their way to show why they are so unpopular? And why isn't Obama stepping up and leading America anyway?
It's a high-stakes gamble by the Republicans that the American voters will vote in 2012 based on the economic conditions in 2012 and blame Obama because he is the face of the federal government. The Republican leadership is betting that we voters will on average forget the crap the Republicans are pulling to prevent government from functioning and instead blame the guy who is in charge for the previous three years.
The Republicans can (possibly) make this work because the Constitution created a Presidential system with shared powers. The President can tell Congress what he wants to do, but nothing gets into the budget that does not have the approval of the leadership of House of Representatives - currently John Boehner (R - OH.) And John Boehner is currently be led by the nose by the extremist social conservatives who call themselves the tea party who were elected in the 2010 election. Hey! American voters can't blame the Republicans if they are being forced to cater to extremist crazies, can they? No, the Republicans are betting that the American voters in 2012 will blame the bad economic conditions (caused by Bush and the Republicans) on the man who cannot get the House of Representatives (under Republican leadership) to pass a budget that includes programs that will actually increase employment in America.
This Republican high-stakes gamble is based on the idea that the (illegitimate foreign-born Muslim Black) President Barak Obama has failed to make things better for the average Americans in spite of the total obstruction he faces from the Republican Party, FOX News, and Rush Limbaugh.
Why do I call it a high-stakes gamble for the Republicans? Because they are betting the future of their party on the ignorance, stupidity and short memory of the average American voter. The Republican Party is already at low levels of disapproval never before reached by an American national party in the history of approval/Disapproval polls. But they have 14 months until the 2012 election and they have control of an amazing propaganda machine here in America (centered on FOX and on the right-wing talk shows of the Limbaugh type.)
The Republicans are also depending on the fact that Obama's polls are not that great right now, either. Again, they think that their efforts to neuter the effectiveness of government between now and the election and their propaganda machine can together drive those polls much lower by the time of the election.
At lot of liberals/progressives/Democrats probably agree with the Republicans about how low Obama's polls are and will be at the time of the election. But what is happening is that the Obama White House is doing two things. First, they are not having Obama stand up, present major policies that he has to have passed, and draw the automatic fire that will come from the Republicans. Obama simply cannot champion any program because it will automatically be vetoed by the Republicans, even if it was one they previously championed themselves. Second, Obama is doing his job as President, especially in foreign policy. The death of Osama bin Laden (which Bush found so difficult that he publicly abandoned the effort) and the overthrow of Ghadaffi based on a NATO coalition that Obama put together have clearly demonstrated that Obama is doing his job extremely well when no obstructed by the Republicans.
There will be no jobs bills or anything else of significance getting through the Republicans in Congress before the 2102 election. The Republicans cannot afford to let Obama succeed in anything. As I have said, this is high-stakes for the Republicans. They are going to have to respond to Obama by getting even more extreme right-wing.
Obama's high-stakes gamble is that the voters will recognize that the Republicans are the source of American failure. Obama has been and continues to let them prove that.
So we see a pair of political high-stakes gambles being played out between now and the 2012 election. The Republicans are doing everything they can do both legislatively and propaganda-wise to stop Obama from succeeding as President and then blaming his for his failure, while Obama is doing everything he can do to govern effectively in spite of Republican obstruction and working to force the Republicans to expose their anti-American anti-governance policies to the voters.
If this were a high-stakes poker game being played on TV it would be fun to watch. As it is the results in 2012 may well determine if America continues as a major industrial and political power in the world in the 21st century or is reduced to a secondary nation run by self-centered wealthy corporate and banking thugs who finance a proto-fascist political system.
Thursday, August 25, 2011
Whoever has been advertising (Koch brothers and the FOX News Network) for the tea party has been selling a lie.
Seven deadly (yet perhaps innocent) frauds.The book is a pdf of 63 pages, the first two of which are blank. Be sure you go down to the start of the document.
First,government finance is supposed to be similar to household finance:government needs to tax and borrow first before it can spend.
Second, today’s deficits burden our grandchildren with government debt.
Third, worse, deficits absorb today’s saving.
Fourth, SocialSecurity has promised pensions and healthcare that it will never be able to afford.
Fifth, the U.S. trade deficit reduces domestic employment and dangerously indebts Americans to the whims of foreigners - who might decide to cut off the supply of loans that we need.
Sixth, and related to fraud number three, we need savings to finance investment (so government budgets lead to less investment).
And, finally, higher budget deficits imply taxes will have to be higher in the future - adding to the burden on future taxpayers.
Mosler shows that whether or not these beliefs are innocent, they are most certainly wrong. Again, there might be some sort of economy in which they could be more-or-less correct. For example, in a nonmonetary economy, a farmer needs to save seed corn to ‘invest’ it in next year’s rop. On a gold standard, a government really does need to tax and borrow to ensure it can maintain a fixed exchange rate. And so on. But in the case of nonconvertible currency (in the sense that government does not promise to convert at a fixed exchange rate to precious metal or foreign currency), none of these myths holds. Each is a fraud.
The best reason to read this book is to ensure that you can recognize a fraud when you hear one. And in his clear and precise style. Mosler will introduce you to the correct paradign to develop an understanding of the world in which we actually live.”
Now comes Warren Mosler with a small book, setting out his reasoning on seven key issues. These relate to government deficits and debt, to the relation between public deficits and private savings, to that between savings and investment, to Social Security and to the trade deficit. Warren calls them “Seven Deadly Innocent Frauds” - taking up a phrase coined by my father as the title of his last book. Galbraith-the-elder would have been pleased.
The common thread tying these themes together is simplicity itself. It’s that modern money is a spreadsheet! It works by computer! When government spends or lends, it does so by adding numbers to private bank accounts. When it taxes, it marks those same accounts down. When it borrows, it shifts funds from a demand deposit (called a reserve account) to savings (called a securities account). And that for practical purposes is all there is. The money government spends doesn’t come from anywhere, and it doesn’t cost anything to produce. The government therefore cannot run out.
Money is created by government spending (or by bank loans, which create deposits). Taxes serve to make us want that money - we need it in order to pay the taxes. And they help regulate total spending, so that we don’t have more total spending than we have goods available at current prices - something that would force up prices and cause inflation. But taxes aren’t needed in advance of spending - and could hardly be, since before the government spends there is no money to tax.
A government borrowing in its own currency need never default on its debts; paying them is simply a matter of adding the interest to the bank accounts of the bond holders. A government can only decide to default – an act of financial suicide – or (in the case of a government borrowing in a currency it doesn’t control) be forced to default by its bankers. But a U.S. bank will always cash a check issued by the US
Government, whatever happens.
Nor is the public debt a burden on the future. How could it be? Everything produced in the future will be consumed in the future. How much will be produced depends on how productive the economy is at that time. This has nothing to do with the public debt today; a higher public debt today does not reduce future production - and if it motivates wise use of resources today, it may increase the productivity of the economy in the future.
Public deficits increase financial private savings - as a matter of accounting, dollar for dollar. Imports are a benefit, exports a cost. We do not borrow from China to finance our consumption: the borrowing that finances an import from China is done by a U.S. consumer at a U.S. bank. Social Security privatization would just reshuffle the ownership of stocks and bonds in the economy – transferring risky assets to seniors and safer ones to the wealthy – without having any other economic effects. The Federal Reserve sets interest rates where it wants.
All these are among the simple principles set out in this small book.
Friday, August 19, 2011
Rick Perry has been selling off Texas government to make sure that he has the money he needs to run for office. Corrupt? Crooked? Yeah, what else is new? Perry is a Texas Republican and the governor.
Rick Perry is not stupid. He is a farm boy who is quite shrewd at getting what he wants and at selling his services. But he is governor of a state (Texas) which does not require any significant work from the governor (the state constitution was written right after Reconstruction to prevent carpetbaggers from controlling the state) and Perry has not demonstrated much knowledge of when the government really should do.
Thursday, August 18, 2011
The key to decoding Fox News isn't hosts Bill O'Reilly or Sean Hannity. It isn't even News Corp chief Rupert Murdoch. To understand what drives Fox News, and what its true purpose is, you must first understand Chairman Ailes. "He is Fox News," says Jane Hall, a Fox commentator for 10 years, who defected over Ailes's embrace of the fear-mongering Glenn Beck. "It's his vision. It's a reflection of him."Roger Aisles is working to be the kingmaker here in America. To do it he has coarsened American politics and made it much less responsive to the needs and desires of Americans.
Ailes runs the most profitable – and therefore least accountable – head of the News Corp hydra. Fox News reaped an estimated profit of $816m last year – nearly a fifth of Murdoch's global haul. The cable channel's earnings rivalled those of News Corp's entire film division, which includes 20th Century Fox, and helped offset a slump at Murdoch's beloved newspapers unit, which took a $3bn writedown after acquiring the Wall Street Journal. With its bare-bones newsgathering operation – Fox News has one-third of the staff and 30 fewer bureaus than CNN – Ailes generates profit margins above 50%. Nearly half comes from advertising and the rest is fees from cable companies. Fox News now reaches 100m households, attracting more viewers than all other cable news outlets combined, and Ailes aims for his network to "throw off a billion in profits".
The outsize success of Fox News gives Ailes a free hand to shape the network in his own image. "Murdoch has almost no involvement with it at all," says Michael Wolff, who spent nine months embedded at News Corp researching a biography of the Australian media giant. "People are afraid of Roger. Murdoch is, himself, afraid of Roger. He has amassed enormous power within the company – and within the country – from the success of Fox News."
The Obama era has spurred sharp changes in the character and tone of Fox News. "Obama's election has driven Fox to be more of a political campaign than it ever was before," says Burns, the network's former media critic. "Things shifted," agrees Jane Hall, who fled the network after a decade as a liberal commentator. "There seemed suddenly to be less of a need to have a range of opinion. I began to feel uncomfortable."
Most striking, Ailes hired Glenn Beck away from CNN and set him loose on the White House. During his contract negotiations, Beck recounted, Ailes confided that Fox News was dedicating itself to impeding the Obama administration. "I see this as the Alamo," Ailes declared. Leading the charge were the ragtag members of the Tea Party uprising, which Fox News propelled into a nationwide movement. In the buildup to the initial protests on 15 April 2009, the network went so far as to actually co-brand the rallies as "FNC Tax Day Tea Parties."
According to recent polls, Fox News viewers are the most misinformed of all news consumers. They are 12 percentage points more likely to believe the stimulus package caused job losses, 17 points more likely to believe Muslims want to establish Sharia law in America, 30 points more likely to say that scientists dispute global warming, and 31 points more likely to doubt President Obama's citizenship. At the height of the healthcare debate, more than two-thirds of Fox News viewers were convinced Obamacare would lead to a "government takeover", provide healthcare to illegal immigrants, pay for abortions and let the government decide when to pull the plug on grandma. In fact, a study by the University of Maryland revealed that ignorance of Fox viewers actually increases the longer they watch the network. That's because Ailes isn't interested in providing people with information, or even a balanced range of perspectives. Like his political mentor, Richard Nixon, Ailes traffics in the emotions of victimisation.
"What Nixon did – and what Ailes does today in the age of Obama – is unravel and rewire one of the most powerful of human emotions: shame," says Perlstein, the author of Nixonland. "He takes the shame of people who feel that they are being looked down on, and he mobilises it for political purposes. Roger Ailes is a direct link between the Nixonian politics of resentment and Sarah Palin's politics of resentment. He's the golden thread."
Fox News stands as the culmination of everything Ailes tried to do for Nixon back in 1968. He has created a vast stage set, designed to resemble an actual news network, that is literally hard-wired into the homes of millions of America's most conservative voters. Republican candidates then use that forum to communicate directly to their base, bypassing the professional journalists Ailes once denounced as "matadors" who want to "tear down the social order" with their "elitist, horse-dung, socialist thinking". Ironically, it is Ailes who has built the most formidable propaganda machine ever seen outside of the Communist bloc, pioneering a business model that effectively monetises conservative politics through its relentless focus on the bottom line. "I'm not in politics," Ailes recently boasted. "I'm in ratings. We're winning."
The only thing that remains to be seen is whether Ailes can have it both ways: reaching his goal of $1bn in annual profits while simultaneously dethroning Obama with one of his candidate-employees. Either way, he has put the Republican party on his payroll and forced it to remake itself around his image. Ailes is the Chairman, and the conservative movement now reports to him. "Republicans originally thought that Fox worked for us," said David Frum, the former Bush speechwriter. "Now we're discovering that we work for Fox."
FOX News and Roger Aisles are a cancer in America's belly and need to be recognized and dealt with. If that is done, perhaps the Republican Party can recover to some extent and once again become a serious American political party.
Wednesday, August 17, 2011
One of Texas Governor Rick Perry’s oft-touted strengths in the Republican primary is his demonstrated prowess at fundraising. Less widely known is how he has raised that money and what he has done in return for it. According to Texas good government and environmental watchdogs, Perry has raised much of his campaign funds from business executives who have financial interests in state government decisions. Often Perry’s supporters come from the energy sector and Perry’s help for them has come at the expense of the environment.Perry rewards those who make sizeable contributions with appointments and political favors. He also works hard to do what his contributores want him to do. His seond largest all time donor is the owner of a nuclear waste dump, Harold Simmons.
Over his three campaigns for governor Perry raised a remarkable $102 million. Perry’s predecessor, George W. Bush, who was no slouch at fundraising himself, brought in $41 million over two campaigns.
Half of Perry’s haul, $51 million, has come from just 204 sources. Some are political action committees, but most are wealthy individuals. “He relies on a relatively small network of very big hitters, wealthy businessmen and their spouses who want something out of Texas government,” says Craig McDonald, director of Texans for Public Justice, a nonprofit research group that tracks the influence of money in Texas politics. As the Dallas Morning News reported during Perry’s re-election bid last year, “Perry tapped scores of big-dollar donors—including some who have business before the state or have benefited from taxpayer subsidies,” to vastly outraise his Democratic opponent, Bill White.
Perry led the charge in 2010, while Simmons gave hundreds of thousands of dollars to Perry’s re-election campaign, to allow Simmons to import nuclear waste from thirty-eight states. On June 27 of this year, ten days after Perry signed the legislation, Simmons gave $100,000 to Americans for Rick Perry. Tom Smith, director of Public Citizen’s Texas office, estimates that the rule change will bring upward of $2 billion for Simmons. “If you put money in Perry’s purse, he’ll create policies you need,” says Smith.Essentially Rick Perry is owned by Bob Perry, Harold Simmons, and a few similar very wealthy individuals. Rick Perry has been happy to sell the health and economic well-being of Texans to these people.
Perry has been similarly accommodating of various other energy interests in the state. Texas has violated the Clean Air Act by allowing industrial plants such as oil refineries to reduce emissions overall rather than at each emissions point. When the Environmental Protection Agency informed Texas that they would have to take over Clean Air Act implementation in the state, Perry complained. “Perry’s on the cutting edge of this whole ‘job-killing EPA’ strategy that Republicans have used,” says Smith. There’s a saying Texas, according to Smith that “it’s cheaper to invest in politicians than in pollution controls.” Perry has been similarly critical of the EPA’s efforts to regulate greenhouse gases nationally.
Perry has been carrying water for environmentally destructive industries since his days in the Texas legislature. Back then, in the late 1980s, he led efforts to prevent species such as the golden cheek warbler from being listed as endangered, because their habitats in West Texas were threatened by suburban sprawl. Developers feared that they would be unable to pave over sensitive lands. Perry’s all-time biggest donor is home builder Bob Perry (no relation).
Now those same people want to buy the government of the United States. That's why Rick Perry is running for President.
Tuesday, August 16, 2011
I keep hearing comparisons between the London riots and riots in other European cities—window smashing in Athens, or car bonfires in Paris. And there are parallels, to be sure: a spark set by police violence, a generation that feels forgotten.There's more at the link. It would take a conservative to try to claim that there was no basis for the riots in the conservative austerity cuts. Sometimes the only speech that the oppressed poor can conduct that gets media attention involves fire, theft and violence. As in Argentina, the wealthy sacked the country first and now the conservatives want to be left alone with the political power to enjoy the fruits of el saqueo.
But those events were marked by mass destruction; the looting was minor. There have, however, been other mass lootings in recent years, and perhaps we should talk about them too. There was Baghdad in the aftermath of the US invasion—a frenzy of arson and looting that emptied libraries and museums. The factories got hit too. In 2004 I visited one that used to make refrigerators. Its workers had stripped it of everything valuable, then torched it so thoroughly that the warehouse was a sculpture of buckled sheet metal.
Back then the people on cable news thought looting was highly political. They said this is what happens when a regime has no legitimacy in the eyes of the people. After watching for so long as Saddam and his sons helped themselves to whatever and whomever they wanted, many regular Iraqis felt they had earned the right to take a few things for themselves. But London isn’t Baghdad, and British Prime Minister David Cameron is hardly Saddam, so surely there is nothing to learn there.
How about a democratic example then? Argentina, circa 2001. The economy was in freefall and thousands of people living in rough neighborhoods (which had been thriving manufacturing zones before the neoliberal era) stormed foreign-owned superstores. They came out pushing shopping carts overflowing with the goods they could no longer afford—clothes, electronics, meat. The government called a “state of siege” to restore order; the people didn’t like that and overthrew the government.
Argentina’s mass looting was called El Saqueo—the sacking. That was politically significant because it was the very same word used to describe what that country’s elites had done by selling off the country’s national assets in flagrantly corrupt privatization deals, hiding their money offshore, then passing on the bill to the people with a brutal austerity package. Argentines understood that the saqueo of the shopping centers would not have happened without the bigger saqueo of the country, and that the real gangsters were the ones in charge.
But England is not Latin America, and its riots are not political, or so we keep hearing. They are just about lawless kids taking advantage of a situation to take what isn’t theirs. And British society, Cameron tells us, abhors that kind of behavior.
This is said in all seriousness. As if the massive bank bailouts never happened.
- Unraveling Mexico's Sinaloa drug cartel 1 of 4 - 7/24/11
- The strands of the Sinaloa drug cartel web 2 of 4 - 7/26/11
- Flying high for the Sinaloa drug cartel 3 of 4 - 7/27/11
- Suspicion in Mexico's Sinaloa cartel 4 of 4 - 7/28/11
- One Mexico border city is quiet, maybe too quiet Earlier story - 9/16/2009
This was not the tea partiers-gone-wild. This was not the Republicans reacting to disaffected voters as a result of the poor economy. It started before the economic collapse in fall of 2008 but was intended to take advantage of the economic conditions. This has been a long-term centrally-coordinated power grab by the national conservative Republicans.
This article was reported by Lori Montgomery, Paul Kane, Brady Dennis, Alec MacGillis, David Fahrenthold, Rosalind Helderman, Felicia Sonmez and Dan Balz. It was written by Dennis, MacGillis and Montgomery.The story can be read in full here.
In mid-January, newly installed as the GOP House majority leader, Virginia’s Eric Cantor rose to the podium inside a spacious hotel ballroom to deliver a message to his troops, including the 87 newcomers who had given the party control of the House.
A vote to increase the nation’s $14.3 trillion debt limit was coming soon, he told the caucus members who had gathered at the Marriott in Baltimore’s Inner Harbor for a closed-door retreat less than 10 days after taking power. Think of it as a “hidden” opportunity, he implored them, a chance to achieve their goal of reining in the federal government and its spending habits.
“I’m asking you to look at a potential increase in the debt limit as a leverage moment when the White House and President Obama will have to deal with us,” said Cantor, one of several new House leaders who detailed the game plan for the coming months. “Either we stick together and demonstrate that we’re a team that will fight for and stand by our principles, or we will lose that leverage.”
The frantic showdown that followed, bringing the nation to the brink of default, looked like the haphazard escalation of a typical partisan standoff.
It was the natural outgrowth of a years-long effort by GOP recruiters to build a new majority and reverse the party’s fortunes. That effort began before the economy collapsed in 2008, before the government bailouts that followed, before the tea party rose in response to push its anti-tax, anti-spending message.
With the backing of the GOP establishment, Cantor and two colleagues banded together as the “Young Guns,” drawing their nickname from a magazine feature anointing them rising stars. They scoured the country for like-minded conservatives who shared their uncompromising commitment to shrinking the federal government. They showered these Young Gun recruits with money and support and exhorted them to maintain a laser-like fiscal focus.
By early 2010, talk of the “debt ceiling” began to creep into the lexicon of some Young Gun candidates, first as a reaction to Congress yet again giving the nation the authority to borrow more money. But in time, it became a shorthand, their synonym for all that was wrong with Washington.
How the shorthand of 2010 grew into the showdown of 2011 is the story of a Republican resurgence that brought immense advantage to the leadership but also created immense expectations among this new breed of lawmaker. Having built a majority on ideology, the GOP leadership found itself struggling to control a rambunctious rank and file determined to live up to the bold rhetoric that had brought it to Washington.
The newcomers took Cantor seriously when he urged them in January to see the debt ceiling as leverage. Democrats called the GOP irresponsible for gambling with the economy and the nation’s flawless credit. Republicans countered that an epic clash over the debt limit was inevitable, given the outcome of the election and widespread anger with runaway government spending.
When the deal was finally done and the threat of an economy-rattling default averted, the newcomers’ disdain for compromise had proved effective. They got most of what they wanted and gave little ground.
The new majority emerged emboldened — and hankering for the confrontations to come — even as the financial markets and much of the country reacted with unease about what had just happened.
This account of the party’s transformation, and its impact on the nation’s economic course, is drawn from interviews with the leading participants during this summer’s drama and from earlier interviews, some of them recorded, at various points during the past 21 / 2 years.
There are a lot of questions that flow from this story. One important question is why in Hell the media did not report it earlier. But if you had the feeling throughout the Debt Crisis discussions that the Republicans were doing their best to advance the cause of the Republican Party and to Hell with the needs of the United States, this story makes it completely clear that they were doing exactly that.
Sunday, August 14, 2011
Marx, among other theories, argued that capitalism had an internal contradiction that would cyclically lead to crises, and that, at minimum, would place pressure on the economic system.The shock headline "Marx was right" ignores the fact that everything Roubini is reported here to have said is well-proven conventional modern macroeconomics. Everyone in the economics business and most honest bankers (there probably are at least two out there) know quite well that what Roubini says is true. The existing economic models all have this built into them! There is no honest argument!
Companies, Roubini said, are motivated to minimize costs, to save and stockpile cash, but this leads to less money in the hands of employees, which means they have less money to spend and flow back to companies.
Now, in current financial crisis, consumers, in addition to having less money to spend due to the above, are also motivated to minimize costs, to save and stockpile cash, magnifying the effect of less money flowing back to companies.
"Karl Marx had it right," Roubini said in an interview with wsj.com. "At some point capitalism can self-destroy itself. That's because you can not keep on shifting income from labor to capital without not having an excess capacity and a lack of aggregate demand. We thought that markets work. They are not working. What's individually rational...is a self-destructive process."
Roubini added absent organic, strong GDP growth -- which can increase wages and consumer spending -- what's needed is large fiscal stimulus, agreeing with another high-profile economist, Nobel Prize-winner Paul Krugman, that, in the case of the United States, the $786 billion fiscal stimulus approved by Congress in 2009 was too small to create the aggregate demand necessary to advance the U.S. economic recovery to a self-sustaining expansion.
Absent additional fiscal stimulus, or unexpected strong GDP growth, the only solution is a universal debt restructuring for banks, homes (essentially households/families), and governments, Roubini said. However, no such universal restructuring has occurred, Roubini said.
Without that additional fiscal stimulus, that lack of restructuring has led to "zombie houses, zombie banks, and zombie governments," he said.
No Good Choices Outside of Fiscal Stimulus or Debt Restructuring
The United States, Roubini said, can in theory: a) grow itself out of the current problem (but the economy is currently growing too slowly, hence the need for more fiscal stimulus); or b) save itself out of the problem (but if too many companies and citizens save, the flaw Marx identified is magnified); or c) inflate itself out of the problem (but that has extensive collateral damage, he said).
However, Roubini said he did not think the U.S. or the world are now at the point where capitalism in self destructing.
"We're not there yet," Roubini said, but he did add that the current trend, if it continues, "runs the risk of repeating the second leg of the Great Depression" -- the 'mistake of 1937.'
Businesses cannot continue to hoard cash while cutting wages en mass and still have an economy which can afford to buy the products and services the businesses make. But at the same time, no single business is going to start hiring and paying more wages if the market does not exist. This conundrum can only be resolved by the government directly creating jobs and putting money into the hands of consumers.
Of the three forms of organization - traditional, charismatic and bureaucratic, only one is rational and is planned, organized and operated on the basis of science. Thus, control groups.
...both proposals stand on a "three-legged stool": preventing insurance companies from denying coverage for pre-existing conditions, requiring universal coverage to eliminate "free riding," and subsidizing insurance plans to make them affordable to all. This "incremental universalism," fixing the existing system instead of starting from scratch, appeals to Republicans for its private-sector involvement and to Democrats for its universal coverage. That's what made both "Romneycare" and "Obamacare" possible.Both plans were first modeled in
...Gruber['s] Micro-Simulation Model, which—well, let's use Gruber's words: It "takes two sets of inputs, fixed information on individuals and varying information on policy parameters, to predict the effect of health market interventions on the movement of people and dollars within the U.S. healthcare system." For the first time, policy makers were able to see whether they could actually afford their health-reform bills and what impact they would have on the behavior of both employers and individuals.Then more from the architect of the plan, Jonathon Gruber:
Gruber emphasizes, the federal reform is more ambitious and less affordable than the state law was. We've successfully addressed the coverage side of health care, he says. Now, it's time to take a look at the price tag: Do people choose the most cost-effective health care plan? What factors drive their choices? How can we help them choose the best plan? What's the best way to compensate medical providers: paying them for each service or paying them a fixed amount? And what will happen to our health if we pay them less? Ultimately, we need to find a way to slow down the exponential growth of health care costs.So the federal plan is one that (1) builds on the existing health insurance industry, (2) establishes universal healthcare (which will reduce the massive costs involved in unplanned for provision of health services for large groups of people for whom the actual costs are clearly predictable using insurance principles and the Law of Large Numbers) and (3) sets the stage for a system that will slow down the current runaway health costs.
The Republicans want to abandon the ACA but offer absolutely nothing to replace it. Which means that if the Republicans have their way, the average family will be priced out of health care within a very few years. The Republicans are not problem solvers. They are power mad power mongers.
That leaves Ron Paul and Bachmann as Perry's only significant opponents. Neither can get over 20% of the Republican nomination voters. I think we will see Perry for President with a veep who is attractive to the money Republicans. It'll be interesting to see if Perry can bury the hatchet with Karl Rove and the Bush people. The Republican desire to win over Obama is going to be one of Perry's strongest selling points.
Perry's shift to the center after locking up the nomination is going to be eye-ball jarring, but the right-wing media will facilitate it by burying all his pandering to secessionists and to the tea partiers. Anyone who dares bring those things up will be attacked.
Perry locked up the social conservatives with his christian "renewal" service last week. And as a Democrat who changed parties to the Republicans he has crafted an image that he will never be out-flanked to the right.
Sneer if you will, but from what I have seen Perry is probably the most talented, determined and well-organized politician on the Republican national stage. He will give Obama one hell of a run for his money.
And remember, I say this as a Texas Democrat. Do not underestimate what Perry brings to the table. John Henry at 12:58 PM has the right idea.
I do not know if there is enough "Texas Fatigue" outside of Texas in the colonies ... uh, the rest of the US ... to be a barrier to a Perry win for President.
Here, from Redstate, is a conservative view of Rick Perry. This is, of course, during the primary season, though, and may not last beyond that time.
Remember, this article was published early in 2010. Much of what Rick Perry anticipated in politics appears to have occurred, and he is set to take advantage of those changes.
by Paul BurkaWill Perry's talent for identifying voter blocs, separating them and catering to those blocs which will make a difference transfer to the national stage?
One year ago, I wrote a story about the upcoming Republican gubernatorial primary between Governor Rick Perry and Senator Kay Bailey Hutchison. At the time, Hutchison had recently announced her intention to form a committee to explore a race for governor, and her campaign had released a poll showing her 24 points ahead of Perry, 55 percent to 31 percent. The governor’s political career appeared to be in deep trouble. Among Hutchison supporters, 58 percent had a “very favorable” opinion of her. Only 30 percent of Perry supporters felt the same way about him. She led him in every geographical section of the state.
What a difference a year makes. Since then, their fortunes have gone in opposite directions. Perry has held a lead, typically in the low double digits, in almost every poll taken since early summer, and now it is Hutchison’s political career that is in peril: Her Senate term expires on January 1, 2013, and she has said she will not seek reelection. Meanwhile, Perry’s prospects have never been rosier. Just a year after it appeared that he was on the brink of his last race, he is poised to become one of the leaders of his party. His travel schedule, speaking engagements, and television appearances in recent months give every indication that he and his team of advisers are looking beyond Texas to national politics. If Perry defeats Hutchison in the March 2 Republican primary and goes on to win a third full term in November, he will immediately join the crowd of potential presidential aspirants in 2012—if he hasn’t done so already.
Throughout his career, Perry has always benefited from an uncanny knack for being in the right place at the right time, and once again, his luck seems to be working. The Republican field for 2012 is not deep. Mitt Romney and Mike Huckabee are the leftovers, Mark Sanford self-destructed, Sarah Palin is too polarizing, Newt Gingrich is old news, and that leaves . . . well, why not Rick Perry? Who among the contenders has a better conservative record? Who better expresses the anger of the average Republican voter? Who has a more robust fundraising base? Of the governors commonly mentioned—Tim Pawlenty, of Minnesota; Haley Barbour, of Mississippi; Bobby Jindal, of Louisiana; Mitch Daniels, of Indiana—whose state has weathered the recession more successfully?
Most people who follow Texas politics know by now the conventional wisdom about Perry: that he is an accidental governor who inherited the job when George W. Bush became president; that he is “Governor Goodhair” or “Governor 39 Percent” or some similar appellation of mild disrespect accompanied by a twist of humor; that he doesn’t really do anything well except win elections, which he has done with regularity. There is truth in the conventional wisdom, but there is also blindness. Perry has been so often viewed as a caricature that many Texans have failed to recognize his talent. The fact is that no Republican has so ably surfed the wave of populist anger that has swept through the party in the past year.
That Perry has both the potential and the plan to aim higher than the Governor’s Mansion is underscored by the contrast between his campaign and Hutchison’s. Last fall, I attended events at which each candidate appeared. In October, I watched Perry address the Texas Association of Realtors in a banquet room on the second floor of the Hyatt Regency Hotel in central Austin. TAR is one of the largest and most politically active trade associations in the Austin lobby and one of the biggest financial contributors. Its members are exactly the kind of folks a Republican candidate for governor would want in his corner—individual entrepreneurs and hustlers offering the good life in the suburbs to those who seek it, for a 6 percent commission. And Rick Perry has them in his corner.
As I watched him speak I could appreciate the skills that he has acquired during what is now nine years in office, foremost among which is his ability to connect with his constituency. Early in his remarks, he began an anecdote by saying, “I don’t know how many of you watch Fox News,” before adding, in a knowing tone, “but I suppose most of you do.” Later in the speech, he interrupted himself to urge the people in the audience to take out their cell phones. In an instant he transformed himself into the Aggie yell leader he once was. “Put in that you’re fed up,” he prodded them. “No, put in that you’re fired up. Then text it to 956-13. It comes directly to me.” And, of course, there was the inevitable jab at Washington: “It’s frustrating to deal with the federal government. They are supposed to provide a strong military, secure our borders, and deliver the mail.” He paused for effect. “Well, one out of three ain’t bad.”
Several weeks later, I drove to San Antonio, where Hutchison was making an appearance at the Young Women’s Leadership Academy to talk about education, following an earlier stop in Houston, where she spoke on the same subject. The academy is part of a promising but controversial educational experiment—single-sex public schools for girls—that some women’s and educational advocacy groups have condemned as discriminatory. The person who made schools like this possible was Hutchison herself, through an amendment to the No Child Left Behind Act, in 2001.
The event took place in the library. Hutchison spoke from a lectern on the floor, surrounded by girls from the school. Most of them were black or Hispanic. They wore uniforms of white blouses, pleated plaid skirts, and blue cardigans. The rest of the people in attendance were from the school and the school district. No Hutchison supporters were in evidence; no refreshments were provided. This was not a rally; it was a media event, the object of which was to get free airtime in the state’s third-largest TV market. The most important people in the room were not the school officials but four television reporters with tripods.
Hutchison has been critical of Perry’s record on public education—a dropout pandemic, stagnant test scores—and her remarks were primarily about her support of more innovations. “Single-sex schools are very close to my heart,” she said. She also embraced charter schools, magnet schools, and accelerated high schools. She wants the state to switch to electronic textbooks and provide students with a hybrid device similar to the Amazon Kindle.
The two campaign events seemed to have been part of entirely different races. Perry’s speech to the realtors evoked national themes and aimed to tap into a powerful feeling of discontent toward Washington. Hutchison’s appearance in San Antonio, on the other hand, was designed to portray her as a smart policy maker on an important state issue. She did it well. If you didn’t know they were in the same race, you might conclude that they were running for different offices, Perry for president (or perhaps the second spot on the national ticket), Hutchison for governor or lieutenant governor. The problem for Hutchison is that the energy in the Republican party today is not directed at how to make government work better. It is directed against government, and no one channels that anger better than Rick Perry.
That Perry has his sights set on Washington, the place he professes to loathe, would explain a lot—for starters, why he decided to seek four more years as governor, despite rumors that he had told many of his key supporters that if they stuck with him in 2006 (when Hutchison was openly considering running against him) he wouldn’t run again. Hutchison declined to challenge him, no doubt expecting a clear field in 2010, and Perry became Governor 39 Percent after a four-way race. Following this poor showing, most people, myself included, thought there was no way he could face the voters again. He would become Texas’s longest-serving governor, take a victory lap, and make easy money on the boards of companies that had benefited from his governorship.
But that is not how events played out. Perry’s inner circle, particularly his consultant Dave Carney, has believed that he has had national potential at least since 2006. Carney made that point during an interview I had with the Perry team that summer for a story about the upcoming governor’s race. Carney is from New Hampshire, the incubator of presidential ambitions, and he knows what it takes to succeed on a national level. The rest is my hypothesis: Sometime in 2007, after Perry had been sworn in for his second term, his team surveyed the Republican field and the wreckage of the Bush presidency and recognized that 2008 was destined to be a Democratic year. They saw no one in the GOP field who was capable of defeating Hillary Clinton or Barack Obama. (Best not to mention John Edwards.) But they also saw that the two leading Democrats were destined to be unpopular with older white males, the core constituency of the Republican party. The Democratic winner in 2008 was at risk of being a one-term president.
Obama spent at least six years making those calculations and we can see the results. Rick Perry may well be the person the Republican Party has been looking for to defeat Obama in 2012 and if it looks like he is, nothing is going to stop him from getting the Republican nomination for President and taking a strong run against Obama.
Here is a revealing article on Perry in today's Houston Chronicle. It's called "5 lessons Perry learned in his political career." I have no doubt at all that Perry is the sharpest politician and the best placed one in the running for the Republican Presidential nomination today.
The second element "Trust your Team" is going to be important after he goes far right to get the nomination and then has to move to the center for the election. I am certain they already have that planned out as neatly as they planned his announcement to suck the wind from the sails of all the other Republican candidates during Iowa. If the very professionalism of that announcement does not just leave you with a feeling of strong admiration then you are not a true political junkie. Perry and his team have repeatedly demonstrated that level of skill here in Texas.
A second element stands out in the Houston Chronicle article. Like Obama, Perry has quickly become adept at using social media to campaign extremely effectively below the level of the MSM. Political wonks don't see this level so the results often come as a nasty surprise as the votes are counted.
The Republicans don't particularly like any other of the candidates for the nomination either. As soon as they see Perry is serious and moving on the nomination they are going to coalesce around Perry like salt crystals on a string in a supersaturated solution. (Do they still do that experiment in high school chemistry these days?)
One element of the coalescing is going to be to bury the embarrassing secessionist and similar statements in a mass of FOX and Limbaugh verbiage. It was done for "Shrub" and it'll be done again for "Good Hair" - but smoother and more effectively.
Don't plan on "Good Hair" making a major misstep on the national political scene. His reputation for being stupid is a self-defeating lie spread by his (very many) political enemies, much as Bill Clinton's Arkansas political enemies spread lies about him. If you believe it you'll never take the actions needed to defeat him. Unlike the other potential Republican Presidential nominees, to defeat "Good Hair" the Democrats will have to bring their A-game.
Addendum 1:44 PM CDT
I just discovered Red Dirt & Sand. It's a blog on Texas politics, and the blogger has been focusing on Rick Perry.
I'd like to do a similar focus but with a family member undergoing chemotherapy I simply do not have the time I need. Right now I am more likely to spend time posting on care of the Central Venous Catheter, changing dressings and flushing. Nursing was not one of my preferred occupations, but you do what you need to do.
Go read Kenneth Franks blog. We are all going to need to know more about Rick Perry quite soon.
Saturday, August 13, 2011
"We need to tell the media we will not tolerate the tyranny, but we will not react either," said Harpreet Singh, 28. "We are capable, but we will not do it."Go read the entire article form the Guardian. The story is not just some wild kids trying to steal a few TVs. It's about a few wild young guys out to riot, steal or burn but often being restrained by their friends or their families. It's about people joining the demonstrations to make a statement and yet it's about people avoiding the demonstrations because they are concerned the demonstrations will go too far. It's about people defending their own neighborhoods while looking in vain for the police who they expect to defend their neighborhoods. It's also about people who are using social media to incite the next demonstration even as others are using social media to direct the press to various incidents.
It's also about a conservative government in which politicians are reacting in both anger and ignorance to events which the politicians feel disrespects them.
There's a lot in this article that the politicians need to be aware of. The entire set of events began as an effort to send them a message that what the government was doing was not working and was not going to work. It's really about a number of communities who saw an opportunity to communicate their displeasure with the government’s policies, true, but that's only one element of the overall story. It's also simply about a number of communities and how they reacted as communities when they were threatened.
Paul Lewis of the Guardian caught a great deal that rings true from the riots that most of us around the world knows little of the British events beyond pictures on TV of shops and cars burning in the night. It's not just drunk teenagers with fire bombs, although there are some of those. It's about communities that feel they have to communicate with a government that is ignoring them and which is taking advantage of the current circumstances to do so. But it's not a bunch of hopeless dead-enders, either. It's people who expect more from their government than they have been getting.
Monday, August 08, 2011
- Credibility, Chutzpah and Debt Here Paul Krugman points to the idiocy of Standard and Poors senseless downgrading of the US treasury debt. It should be noticed that the international stock markets have been all over the map since they opened Monday, and where did money looking for safety and security go? To US treasury debt.
- The Bad Deal University of Texas professor James K. Gailbraith points out that Obama is not only not a Progressive, he is in fact a conservative who is working league with the American conservatives and with the Pete Peterson Foundation to destroy the American middle class and the two programs that support it most, Social Security and Medicare.
...our country is now finding itself in the worst kind of decline — a slow decline, just slow enough for us to keep deluding ourselves that nothing really fundamental needs to change if our future is to match our past.Go back and look at the paragraph I highlighted. What characterizes the five basic pillars of growth? They are again
Our slow decline is a product of two inter-related problems. First, we’ve let our five basic pillars of growth erode since the end of the cold war — education, infrastructure, immigration of high-I.Q. innovators and entrepreneurs, rules to incentivize risk-taking and start-ups, and government-funded research to spur science and technology.
We mistakenly treated the end of the cold war as a victory that allowed us to put our feet up — when it was actually the onset of one of the greatest challenges we’ve ever faced. We helped to unleash two billion people just like us — in China, India and Eastern Europe. For us to effectively compete and collaborate with them — to maintain the American dream — required studying harder, investing wiser, innovating faster, upgrading our infrastructure quicker and working smarter.
Instead of doing that at the scale we needed — that is, building muscle — we injected ourselves with massive amounts of credit steroids (just like our baseball players). This enabled millions of people to buy homes they could not afford and to fill jobs in construction and retail that did not require that much education. Our European friends went on a similar binge.
All this debt blew up in 2008 in the U.S. and Europe, and that led to the second problem: Homeowners, firms, banks and governments are all now “deleveraging” or trying to — meaning that they are saving more, shopping less, paying off debts and trying to dig out from mortgages that are under water.
No one better explains the implications of this than Kenneth Rogoff, a professor of economics at Harvard, who argued in an essay last week for Project Syndicate that we are not in a Great Recession but in a Great (Credit) Contraction: “Why is everyone still referring to the recent financial crisis as the ‘Great Recession?’ ” asked Rogoff. “The phrase ‘Great Recession’ creates the impression that the economy is following the contours of a typical recession, only more severe — something like a really bad cold. ... But the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation. ...
“In a conventional recession,” Rogoff noted, “the resumption of growth implies a reasonably brisk return to normalcy. The economy not only regains its lost ground, but, within a year, it typically catches up to its rising long-run trend. The aftermath of a typical deep financial crisis is something completely different. ... It typically takes an economy more than four years just to reach the same per capita income level that it had attained at its pre-crisis peak. ... Many commentators have argued that fiscal stimulus has largely failed not because it was misguided, but because it was not large enough to fight a ‘Great Recession.’ But, in a ‘Great Contraction,’ problem No. 1 is too much debt.” Until we find ways to restructure and forgive some of these debts from consumers, firms, banks and governments, spending to drive growth is not going to come back at the scale we need.
Our challenge now, therefore, is to deleverage the economy as fast as possible, while, at the same time, getting back to investing as much as possible in our real pillars of growth so our recovery is built on sustainable businesses and real jobs and not just on another round of credit injections.
- immigration of high-I.Q. innovators and entrepreneurs,
- rules to incentivize risk-taking and start-ups, and
- government-funded research to spur science and technology.
We could fund those things because of the cold war, but not destroy the results in a hot war. The idiocy of the unnecessary invasion of Iraq led to a total waste of American government funds that otherwise would have been better used on education and infrastructure.
Today we live with the results of the tax cuts for billionaires and two unnecessary and poorly fought wars without taxes to support them. This is the libertarian "starve the beast program."
Instead of unleashing American productivity what is happening is that the American conservatives, led by the libertarians, is causing America's slow economic decline in comparison with the rest of the industrial world. This is what Thomas Friedman has caught on to.
The worldwide debt "binge" that Friedman whines about further on comes because the entire world is trapped in the libertarian fantasy that if governments just cut back enough then productivity will be unleashed. But what is actually happening is that the educated workers supported by needed infrastructure aren't there to be productive.
Instead we have big businesses (inherently not sources of increased productivity - that comes from small businesses) sucking up as much money as they can as profits and stashing it on their books as they search for places to invest it. (See the mortgage crisis.)
Until governments start increasing the spending on education and infrastructure and quit penalizing small businesses so that big businesses can make more profits then the world economy is going to continue to decline - with America slowly leading the way.
The transcript is provided Here.
Saturday, August 06, 2011
This is objective analysis? Not hardly. The right-wing liars are already repeating the same idiocies that created the current economic mess and which have made it worse. The problem is that after the bankers on unrestrained Wall Street were allowed to steal too much from the Mortgages they handled and crashed the economy the economy has stalled. It has stalled because there is too little consumer demand for businesses to invest in America! The top 100 businesses are sitting on over $2 trillion they cannot spend to hire workers because there are NO GROWING MARKETS TO INVEST IN! Budget cutting and austerity (the Herbert Hoover solution from 1929 and the 30's) did not work then to get the economy back on track and will not work now.
It's time to listent to Paul Krugman.
In case you had any doubts, Thursday’s more than 500-point plunge in the Dow Jones industrial average and the drop in interest rates to near-record lows confirmed it: The economy isn’t recovering, and Washington has been worrying about the wrong things.We were told last week that there was a 40% chance of a double dip recession. I said then that the real chance was closer to 90%. Unless Krugman's solution is applied then 90% is also too low.
Fred R. Conrad/The New York Times
It’s not just that the threat of a double-dip recession has become very real. It’s now impossible to deny the obvious, which is that we are not now and have never been on the road to recovery.
For two years, officials at the Federal Reserve, international organizations and, sad to say, within the Obama administration have insisted that the economy was on the mend. Every setback was attributed to temporary factors — It’s the Greeks! It’s the tsunami! — that would soon fade away. And the focus of policy turned from jobs and growth to the supposedly urgent issue of deficit reduction.
But the economy wasn’t on the mend.
Yes, officially the recession ended two years ago, and the economy did indeed pull out of a terrifying tailspin. But at no point has growth looked remotely adequate given the depth of the initial plunge. In particular, when employment falls as much as it did from 2007 to 2009, you need a lot of job growth to make up the lost ground. And that just hasn’t happened.
Consider one crucial measure, the ratio of employment to population. In June 2007, around 63 percent of adults were employed. In June 2009, the official end of the recession, that number was down to 59.4. As of June 2011, two years into the alleged recovery, the number was: 58.2.
These may sound like dry statistics, but they reflect a truly terrible reality. Not only are vast numbers of Americans unemployed or underemployed, for the first time since the Great Depression many American workers are facing the prospect of very-long-term — maybe permanent — unemployment. Among other things, the rise in long-term unemployment will reduce future government revenues, so we’re not even acting sensibly in purely fiscal terms. But, more important, it’s a human catastrophe.
To turn this disaster around, a lot of people are going to have to admit, to themselves at least, that they’ve been wrong and need to change their priorities, right away.
Of course, some players won’t change. Republicans won’t stop screaming about the deficit because they weren’t sincere in the first place: Their deficit hawkery was a club with which to beat their political opponents, nothing more — as became obvious whenever any rise in taxes on the rich was suggested. And they’re not going to give up that club.
But the policy disaster of the past two years wasn’t just the result of G.O.P. obstructionism, which wouldn’t have been so effective if the policy elite — including at least some senior figures in the Obama administration — hadn’t agreed that deficit reduction, not job creation, should be our main priority. Nor should we let Ben Bernanke and his colleagues off the hook: The Fed has by no means done all it could, partly because it was more concerned with hypothetical inflation than with real unemployment, partly because it let itself be intimidated by the Ron Paul types.
Well, it’s time for all that to stop. Those plunging interest rates and stock prices say that the markets aren’t worried about either U.S. solvency or inflation. They’re worried about U.S. lack of growth. And they’re right, even if on Wednesday the White House press secretary chose, inexplicably, to declare that there’s no threat of a double-dip recession.
Earlier this week, the word was that the Obama administration would “pivot” to jobs now that the debt ceiling has been raised. But what that pivot would mean, as far as I can tell, was proposing some minor measures that would be more symbolic than substantive. And, at this point, that kind of proposal would just make President Obama look ridiculous.
The point is that it’s now time — long past time — to get serious about the real crisis the economy faces. The Fed needs to stop making excuses, while the president needs to come up with real job-creation proposals. And if Republicans block those proposals, he needs to make a Harry Truman-style campaign against the do-nothing G.O.P.
This might or might not work. But we already know what isn’t working: the economic policy of the past two years — and the millions of Americans who should have jobs, but don’t.
As Krugman said above - there has been no recovery. It should be obvious we were lied to - by everyone including the Obama administration. The austerity idiots - including but not limited to the propaganda idiots of the criminal enterprises run by Rupert Murdoch - are after power for the conservatives, not recovery for America.
The announcement by S&P of the downgrading of US federal debt was a further statement of war against the American people. That war is going to either end in a right-wing dictatorship that pleases Rupert Murdoch and the teabaggers or it is going to end in the kind of revolt in the streets that the people of Wisconsin are now conducting against the right-wing libertarian dictator-governor Scott Walker which the Koch brothers installed in 2010.
It's going to be a long hard slog getting rid of the anti-American conservatives currently working to take over America. Krugman's solution will be a requirement for getting there, but the political wars will be coming first.
The US is still the wealthiest nation in the world. It still CAN pay its bills. But with John Boehner and Mitch McConnell in Congress being whipsawed by the idiot teabaggers like Allen West there is reasonable doubt that the US WILL pay its bills. The S&P downgrade is an indictment of America's current politics.
It is also a total indictment of the Republican Party. Here is Steve Benen's timeline of major US financial decisions over the last 30 years.
1980: Ronald Reagan runs for president, promising a balanced budgetUnless you are a Republican partisan practicing Tobacco Industry Executive-level blindness to facts this timeline clearly shows that the Republican Party is the party of profligate spending and refusal to pay government debts.
1981 - 1989: With support from congressional Republicans, Reagan runs enormous deficits, adds $2 trillion to the debt.
1993: Bill Clinton passes economic plan that lowers deficit, gets zero votes from congressional Republicans.
1998: U.S. deficit disappears for the first time in three decades. Debt clock is unplugged.
2000: George W. Bush runs for president, promising to maintain a balanced budget.
2001: CBO shows the United States is on track to pay off the entirety of its national debt within a decade.
2001 - 2009: With support from congressional Republicans, Bush runs enormous deficits, adds nearly $5 trillion to the debt.
2002: Dick Cheney declares, “Deficits don’t matter.” Congressional Republicans agree, approving tax cuts, two wars, and Medicare expansion without even trying to pay for them.
2009: Barack Obama inherits $1.3 trillion deficit from Bush; Republicans immediately condemn Obama’s fiscal irresponsibility.
2009: Congressional Democrats unveil several domestic policy initiatives — including health care reform, cap and trade, DREAM Act — which would lower the deficit. GOP opposes all of them, while continuing to push for deficit reduction.
September 2010: In Obama’s first fiscal year, the deficit shrinks by $122 billion. Republicans again condemn Obama’s fiscal irresponsibility.
October 2010: S&P endorses the nation’s AAA rating with a stable outlook, saying the United States looks to be in solid fiscal shape for the foreseeable future.
November 2010: Republicans win a U.S. House majority, citing the need for fiscal responsibility.
December 2010: Congressional Republicans demand extension of Bush tax cuts, relying entirely on deficit financing. GOP continues to accuse Obama of fiscal irresponsibility.
March 2011: Congressional Republicans declare intention to hold full faith and credit of the United States hostage — a move without precedent in American history — until massive debt-reduction plan is approved.
July 2011: Obama offers Republicans a $4 trillion debt-reduction deal. GOP refuses, pushes debt-ceiling standoff until the last possible day, rattling international markets.
August 2011: S&P downgrades U.S. debt, citing GOP refusal to consider new revenues. Republicans rejoice and blame Obama for fiscal irresponsibility.
How long can America afford to accept Republican politicians as a legitimate American political party?
Addendum 1:13 PM CDT
This is from Daniel Gross, Economics editor at Yahoo Finance
S&P, which covered itself in a substance other than glory during the mortgage crisis, may have a poor record and strange methodology when it comes to sovereign ratings. France, which has a far higher debt per capita ratio than the U.S., still enjoys a AAA rating. And a downgrade, alone, doesn't mean U.S. interest rates will spike -- on Monday or at any time in the future. Japan's credit rating was downgraded several years ago, when the interest rates its government paid on bonds was already extremely low, and they've generally trended lower in the years since.The decision was more than just S&P's opinion of the politics, though. This was a clear political statement BY S&P itself!
Market conditions, the trajectory of economic growth and relative value can play as big -- if not a bigger -- of a role in determining interest rates than a rating.
But that doesn't mean we should ignore S&P's Friday evening shot across the bow. In downgrading the U.S.'s credit rating, S&P points out what has long been obvious: Washington's inability to come to an agreement on how to close the large fiscal gaps that have emerged since the recession began is troubling. Recent events have sapped the agency's confidence that the government can and will do what is necessary to align revenues with spending commitments. And it's difficult to escape the conclusion that America's credit rating was intentionally sabotaged by Congressional Republicans.
Steve Benen points this out.
Officials from Standard & Poor’s provided documents to the Treasury Department, explaining the downgrade. Obama administration officials noticed a problem: the S&P numbers didn’t add up.S&P makes its evaluations supposedly on the financial records of the organizations issuing debt. If this were the case, then France would have a lower rating than the US, but France still as an AAA rating. S&P was incompetent during the mortgage crisis and it once again proved itself to be financially incompetent and a collection of wealthy political hacks.
On Friday, the company notified the Treasury that it planned to issue a downgrade after the markets closed, and sent the department a copy of the announcement, which is a standard procedure.
A Treasury staff member noticed the $2 trillion mistake within the hour, according to a department official. The Treasury called the company and explained the problem. About an hour later, the company conceded the problem but did not indicate how it planned to proceed, the official said. Hours later, S.& P. issued a revised release with new numbers but the same conclusion.
Got that? S&P prepared an analysis to justify a specific conclusion. The analysis was off by $2 trillion. Treasury explained to S&P that the analysis wasn’t even close to being accurate, which led the ratings agency to concede they’d made a mistake.
And a few hours later, S&P decided to reach the same conclusion anyway. The agency wanted to proceed with a downgrade; whether its numbers added up was irrelevant.
That certainly inspires confidence in the integrity of Standard & Poor’s decision making, doesn’t it?
Addendum II 5:38 PM CDT
If you have any doubt at all that the S&P debt rating downgrade is totally a political act by an incompetent financial rating agency, then go read the analysis by Dean Baker. S&P's "justification" simply doesn't pass the smell test. There is no possibility at all that Social Security will contribute to the deficit in the future and the claim that out of control Medicare costs will effect the budget in the future overlooks the fact that Medicare has a great deal more control over medical costs than the private market does.