America Has a Choice of Victims

Maureen Dowd has a good op-ed in the NY Times in which she looks at the Obamas since of "underappreciation" by the American public. Then she widens it to include Newt Gingerich who feels he is similarly underappreciated and misprepresented by the press:

The Obamas, especially Michelle, have radiated the sense that Americans do not appreciate what they sacrifice by living in a gilded cage. They’ve forgotten Rule No. 1 of politics: No one sheds tears for anyone lucky enough to live at the White House. And after four or eight years of public service, you are assured membership in the 1 percent club.

The Obamas truly feel like victims. But Newt Gingrich, who campaigns by attacking the culture of victimization, plays one on stage. He soared at the Charleston CNN debate by brazenly proclaiming himself the victim of “the elite media protecting Barack Obama” (the same Obama who told Time he was victimized by the press). Newt’s gambit was a calculated way of deflecting attention from a charge by his second wife, Marianne, that the family values he preaches are hypocritical platitudes, given his cheating ways with two wives he divorced when they were ill.

Could 2012, remarkably, be a race between two powerful victims yearning to be lonely at the top?

This is ridiculous. A leader needs to be psychological secure and have a joy in backslapping and glad-handing with people. But the dsyfunctional US political system is giving the American people a choice between flub and flop in the November poll.

Voting in introverts, narcissists, or those who see themselves as victims is asking for perverted politics and a poisoned civil society.

Measuring the "Success" of American Foreign Policy

The Americans blindly go around the world making bad situations worse while slapping themselves on the back and congratulating themselves about "spreading democracy" and "American values" throughout the world. The poor American public has no idea and little interest in the failed policies of their political leaders.

Here is a bit from an excellent article in the UK's Guardian newspaper giving an example of how Iraq has been "lifted up" from the horrors of Saddam Hussein's dark torture state to the light of a... what? a new torture state...

The walls of Um Hussein's living room in Baghdad are hung with the portraits of her missing sons. There are four of them, and each picture frame is decorated with plastic roses and green ribbons as an improvised wreath for the dead.

Um Hussein had six children. Her eldest son was killed by Sunni insurgents in 2005, when they took control of the neighbourhood. Three of her remaining sons were kidnapped by a Shia militia group when they left the neighbourhood to find work. They were never seen again.

She now lives with the rest of her family – a daughter, her last son, Yassir, and half a dozen orphaned grandchildren – in a tiny two-room apartment where the stink of sewage and cooking oil seeps through a thin curtain that separates the kitchen from the living room.

Um Hussein looks to be in her 60s and has one milky white eye. She is often confused and talks ramblingly about the young men in the portraits as if they are alive, then shouts at her daughter to bring tea. She told the Guardian how she had to fight to release Yassir from jail.

Yassir was detained in 2007. For three years she heard nothing of him and assumed he was dead like his brothers. Then one day she took a phone call from an officer who said she could go to visit him if she paid a bribe. She borrowed the money from her neighbour and set off for the prison.

"We waited until they brought him," she said. "His hands and legs were tied in metal chains like a criminal. I didn't know him from the torture. He wasn't my son, he was someone else. I cried: 'Your mother dies for you, my dear son.' I picked dirt from the floor and smacked it on my head. They dragged me out and wouldn't let me see him again.

"I have lost four. I told them I wouldn't lose this one."

Afterwards, the officers called from prison demanding hefty bribes to let him go while telling the family he was being tortured. Um Hussein told the officers she would pay, but they kept asking for more. First it was 1m Iraqi dinars (£560), then 2m, then 5m.

George Bush was an idiot whose ideology blinded him and allowed him to create horrors under the flag of "nation building" and "bringing democracy to the Middle East".

Obama is a much more sophisticated thinker who actually understands foreign policy, but sadly Obama continues the blunder and outrages of American "policy". It is clear that these horrors go deeper than just an "administration". What the US is doing around the world is obviously driven by a cynical need to control the world for the benefit of the rich elites in the US. The veneer of ideology or the cynical use of worlds like "freedom" and "democracy" and "women's rights" are rolled out to plaster a veneer of respectability to what is in fact a horror story passing for "foreign policy".

Obama's Persecution of Whistleblowers

Here is a talk given by whistleblower Jesselyn Radack:



As Racack points out in the video, the chilling fact is that "supposed left-leaning" Obama has brought more charges against whistleblowers than all previous administrations combined. With "friends" like Obama, the political left has no need for enemies.

Great Recession

There is no better concise picture of the Great Recession than this graph from the Calculated Risk blog:

Click to Enlarge
This clearly shows that all previous post World War II recessions which had fully recovered employment by 4 years after the start of the recession. Even the pathetic "recovery" brought about Bush's two tax cuts to "inspire" entrepreneurial spirit got employment back to pre-recession levels in four years. But the recession is different. This is a credit crunch just like the Great Depression.

Obama's "stimulus" was pathetically inadequate with one-third of the money going to "tax cuts" which clearly are very poor stimulants (see the four year delay in recovery due to Bush's tax cut strategy). The other two-thirds was money that truly stimluated but was about three to four times too small for the size of the real problem. But Obama spent all of 2009 and 2010 assuring everybody that his stimulus was a Goldilocks "just right" amount. Then in 2011 Obama compounded his mistake by focusing on "deficits" (read austerity budgets) instead of stimulation to get the economy to come back.

The US economy is in a complete mess because both major political parties are more interested in catering to corporate interest than they are in the people and the real economy. They both spin masterful stories about how their policies are "effective" when it is utterly evident that they fail. Of course the Republicans are grievously wrong-headed. The Democrats at least pretend to cater to the interests of the 99%, but in reality they are just junior partners with the Republicans in acting as the minions of Wall Street, big corporations, and the ultra-rich. Tragic.

EFF's List of Shame

Here is a list of US government "secrecy" actions that are mindless and counter-productive published by the Electronic Frontier Foundation (EFF):

As the year draws to a close, EFF is looking back at the major trends influencing digital rights in 2011 and discussing where we are in the fight for a free expression, innovation, fair use, and privacy.

The government has been using its secrecy system in absurd ways for decades, but 2011 was particularly egregious. Here are a few examples:

• Government report concludes the government classified 77 million documents in 2010, a 40% increase on the year before. The number of people with security clearances exceeded 4.2. million, more people than the city of Los Angeles.


• Government tells Air Force families, including their kids, it’s illegal to read WikiLeaks. The month before, the Air Force barred its service members fighting abroad from reading the New York Times—the country’s Paper of Record.


• Lawyers for Guantanamo detainees were barred from reading the WikiLeaks Guantanamo files, despite their contents being plastered on the front page of the New York Times.


• President Obama refuses to say the words “drone” or “C.I.A” despite the C.I.A. drone program being on the front pages of the nation’s newspapers every day.


• CIA refuses to release even a single passage from its center studying global warming, claiming it would damage national security. As Secrecy News' Steven Aftergood said, “That’s a familiar song, and it became tiresome long ago.”


• The CIA demands former FBI agent Ali Soufan censor his book criticizing the CIA’s post 9/11 interrogation tactics of terrorism suspects. Much of the material, according to the New York Times, “has previously been disclosed in open Congressional hearings, the report of the national commission on 9/11 and even the 2007 memoir of George J. Tenet, the former C.I.A. director.”


• Department of Homeland Security has become so bloated with secrecy that even the “office's budget, including how many employees and contractors it has, is classified,” according to the Center for Investigative reporting. Yet their intelligence reports “produce almost nothing you can’t find on Google,” said a former undersecretary.


• Headline from the Wall Street Journal in September: “Anonymous US officials push open government.”


• NSA declassified a 200 year old report which they said demonstrated its “commitment to meeting the requirements” of President Obama’s transparency agenda. Unfortunately, the document “had not met the government's own standards for classification in the first place,” according to J. William Leonard, former classification czar.


• Government finally declassifies the Pentagon Papers 40 years after they appeared on the front page of the New York Times and were published by the House’s Armed Services Committee.


• Secrecy expert Steve Aftergood concludes after two years “An Obama Administration initiative to curb overclassification of national security information… has produced no known results to date.”


• President Obama accepts a transparency award…behind closed doors.


• Government attorneys insist in court they can censor a book which was already published and freely available online.


• Department of Justice refuses to release its interpretation of section 215 of the Patriot Act, a public law.


• U.S. refuses to release its legal justification for killing an American citizen abroad without a trial, despite announcing the killing in a press conference.


• U.S. won’t declassify legal opinion on 2001’s illegal warrantless wiretapping program.


• National Archive announced it was working on declassifying “a backlog of nearly 400 million pages of material that should have been declassified a long time ago.”


• The CIA refused to declassify Open Source Works, “which is the CIA’s in-house open source analysis component, is devoted to intelligence analysis of unclassified, open source information” according to Steve Aftergood.


• Twenty-three year State Department veteran gets his security clearance revoked for linking to a WikiLeaks document on his blog.


• The ACLU sued asking the State Department to declassify 23 cables out of the more than 250,000 released by WikiLeaks. After more than a year, the government withheld 12 in their entirety. You can see the other 11, heavily redacted, next to the unredacted copies on the ACLU website.

The ACLU said it sued the State Department in part to show the "absurdity of the US secrecy regime."

Go to the original EFF posting to access the embedded links.

The Bush administration was blatant in its disregard for law and its disrespect for sensible security. The Obama regime is more devious. It gives the pretense of "concern" but its actions belie the truth. There is little difference between the Republicans and the Democrats. They both believe in the "mushroom theory" of government: keep the people in the dark and feed them shit.

Corruption in High Places

Here is a bit from a post by Matt Taibbi in his Rolling Stone blog:

Obama and Geithner: Government, Enron-Style

Strongly recommend this piece at the Huffington Post by Jeff Connaughton, a former aide to Senator Ted Kaufman. Jeff is one of the smartest guys on the Hill and is particularly strong on issues surrounding Wall Street and the regulatory system. In this piece, he takes apart the oft-stated mantra that what Wall Street firms did during and after the crisis was maybe unethical, but not illegal.

He takes particular aim at Barack Obama, who recently tossed that line out on 60 Minutes in what I thought was one of the real low moments of his presidency. Here’s Jeff’s take:

Speaking in Kansas on December 6, [Obama] said, "Too often, we've seen Wall Street firms violating major anti-fraud laws because the penalties are too weak and there's no price for being a repeat offender." Just five days later on 60 Minutes, he said, "Some of the least ethical behavior on Wall Street wasn't illegal." Which is it? Have there been no prosecutions because Wall Street acted legally (albeit unethically)? Or did Wall Street repeatedly violate major anti-fraud laws (and should thus find itself in the dock)?

The President is confusing "legal" with "difficult to prosecute successfully."

The notion that what Wall Street firms did was merely unethical and not illegal is not just mistaken but preposterous: most everyone who works in the financial services industry understands that fraud right now is not just pervasive but epidemic, with many of the biggest banks committing entire departments to the routine commission of fraud and perjury – every single one of the major banks, for instance, devotes significant manpower to robosigning affidavits for foreclosures and credit card judgments, acts which are openly and inarguably criminal.

Banks and hedge funds routinely withhold derogatory information about the instruments they sell, they routinely trade on insider information or ahead of their own clients’ orders, and corrupt accounting is so rampant now that industry analysts have begun to figure in estimated levels of fraud in their examinations of the public disclosures of major financial companies.

Beyond that, as Jeff points out, Obama is simply not telling the truth about the supposedly insufficient penalties available to regulators. Employing the famous "mistakes were made" use of the passive tense, Obama copped out in his December 6 speech by saying that “penalties are too weak." As Jeff points out, what Obama should have said is that "the penalties my own regulators chose to dish out were too weak":

Moreover, the President is misleading us when he says that Wall Street firms violate anti-fraud law because the penalties are too weak. Repeat financial fraudsters don't pay relatively paltry -- and therefore painless -- penalties because of statutory caps on such penalties. Rather, regulatory officials, appointed by Obama, negotiated these comparatively trifling fines. This week, the F.D.I.C. settled a suit against Washington Mutual officials for just $64 million, an amount that will be covered mostly by insurance policies WaMu took out on behalf of executives, who themselves will pay just $400,000. And recently a federal judge rejected the S.E.C.'s latest settlement with Citigroup, an action even the Wall Street Journal called "a rebuke of the cozy relationship between regulators and the regulated that too often leaves justice as an orphan."

What makes Obama’s statements so dangerous is that they suggest an ongoing strategy of covering up the Wall Street crimewave. There is ample evidence out there that the Obama administration has eased up on prosecutions of Wall Street as part of a conscious strategy to prevent a collapse of confidence in our financial system, with the expected 50-state foreclosure settlement being the landmark effort in the cover-up, intended mainly to bury a generation of fraud. Here’s how Jeff puts it:

In Ron Suskind's book, Confidence Men, he quotes Treasury Secretary Timothy Geithner as saying, "The confidence in the system is so fragile still... a disclosure of a fraud... could result in a run, just like Lehman." The Obama Administration is pushing hard for a 50-state settlement with the major banks for their fraudulent foreclosure practices, even though several state attorneys general have rejected this approach because, in their view, it would shield too much wrongdoing. Regrettably, Obama's top officials and lawyers seem more eager to restore the financial sector to health than establish criminal accountability among the executives who were in charge.

In other words, Geithner and Obama are behaving like Lehman executives before the crash of Lehman, not disclosing the full extent of the internal problem in order to keep investors from fleeing and creditors from calling in their chits. It’s worth noting that this kind of behavior – knowingly hiding the derogatory truth from the outside world in order to prevent a run on the bank – is, itself, fraud!

This is exactly the mindset that led Lehman to the abuses of the "Repo 105" accounting trick, in which loans were disguised as revenues in order to prevent the outside world from knowing the dire state of the bank’s balance sheet.

Now Obama and Geithner are engaged in the same sort of activity, only they’re trying to prevent a run not on an individual bank, but the entire American financial services sector. Geithner seems really to believe that if fraud were aggressively policed, and the world made aware of the incredible extent of the illegality in our markets, that international confidence in the American financial sector would plummet and our economy would suffer – and suffer, incidentally, on Barack Obama’s watch.

I was a big fan of Obama in 2008. I had read his books and followed the campaign. I was sucked into deeply believing in his "change you can believe in" and "hope" themes. I'm especially bitter by how he has proven himself to be a liar. He stole the vote because he knowingly promised one thing and did another. He is better than the Republican idiot, but Obama is an abomination and doesn't deserve the presidency. But, sadly, people better vote for him rather than the horse pucky that the Republicans will nominate.

It is criminal that the US political system throws up such crappy candidates... and allows them to lie their into power. There is no "representative" democracy if voters have to take a pig in a poke.

A Summary of America's "Effort" In Iraq

Here is a bit from an opinion piece in the NY Times by Maureen Dowd that nails down the idiocy of US policy in Iraq:

You’d never know it, given Republicans’ churlish silence and unseemly sniping, but the president and the vice president have stumbled and bumbled their way to an acceptable ending to the war that George W. Bush and Dick Cheney so recklessly started. It was a magnificent miscalculation that Obama warned in 2002 was “a dumb war.”

Funnily enough, Obama has found it easier to wrap up Bush’s foreign policy blunders than his domestic ones.

Vice President Joseph Biden spent so many hundreds of hours hashing things out with Iraqi officials that he knew the names of their grandchildren — just as Bill Clinton could reel off street names during the peace effort in Northern Ireland.

In the painful calculation of what’s “good enough,” as we end our two attenuated wars, the White House sees it this way on Iraq: The baby is born. The gestation period couldn’t be 18 years; eight years was bad enough. The midwife had to leave.

The spectacular error that Bush, Cheney and Donald Rumsfeld made was feeling we needed a post-9/11 demonstration of war to prove our toughness. If they had merely pushed along the Arab Spring, they could have saved a trillion dollars and the lives of 4,500 American troops.

It would have been more of a boon to our national security to finish off the Afghanistan mission and kill Osama bin Laden sooner. Instead, the Bush team let itself get distracted with nation-building in Iraq when our own nation was falling apart, and President Obama ended up surging and withdrawing in Afghanistan at the same time, which made no sense.

Before W. tried to outdo his daddy, we were a country that usually had to take a punch before we went to war. We didn’t unilaterally start wars.

In her new memoir, Condoleezza Rice has a sentence so stunningly lame it makes you want to scream — or cry. “The fact is,” she writes, “we invaded Iraq because we believed we had run out of other options.”

I’m not a National Security Council adviser, but I can think of about a hundred other options we had with Saddam.

At least Condi admits that one of the inflated and improvised rationales for war wasn’t true: “We did not go to Iraq to bring democracy any more than Roosevelt went to war against Hitler to democratize Germany, though that became American policy once the Nazis were defeated.”

The real tragedy is that in 2008 Americans voted to change policies but got a Bush "lite" in Obama. Obama promised to get out of the war, stop torture, and get out of Guantanamo. Once in office he "surged" in Afghanistan and dragged his feet on all these commitments. He may have stopped torturing prisoners, but he has upped the ante with a lot more drone-based killings. Rather than arrest Osama Bin Laden he sent in a killer elite to "terminate" rather than capture. There is something indescribably sinister in a policy of death rather than justice.

The 2012 Fight

Here is Robert Reich laying out the basis for a real political fight in the 2012 US Presidential campaign:



I'm pessimistic because in 2008 Obama ran on a platform of real change and then gave the US 4 more years of watered down Bush policies of war, tax cuts for the rich, and a focus on deficits. He should have fought for a real stimulus, for public works programs to reduce unemployment, and for mortgage relief. Of the promises he made, he lived up to very few. Instead he surprised the American people with a pro-Wall Street, pro-rich guy, pro-corporation, business-as-usual in Washington. Now he wants people to believe that he has "changed". I don't think so.

But sadly, the other choice is far worse. A crazed right wing nut from the fundamentalist Christian and Libertarian minorities that hunger to set the agenda for the vast majority. That would be letting the inmates run the asylum.

Speaking the Truth

Here is a post by Dean Baker on his Beat The Press blog:

President Obama Wants Credit for Avoiding a Great Depression: Where Is the Ridicule?

In its top of the hour news segment NPR reported that President Obama hoped that voters would give him credit for avoiding a second Great Depression. If this is an accurate representation of what President Obama said then it should have devoted a segment to economists ridiculing the president for trying to set an unbelievably low bar for measuring the success of his economic policy.

The first Great Depression was the result of a decade of inadequate policy responses. The massive spending associated with World War II that eventually got us out of the Great Depression could have been undertaken a decade sooner, if there had been political will.

There was nothing about the financial crisis at the beginning of President Obama's term that could have condemned the country to decade of double-digit unemployment. This only could have happened if Congress failed to respond adequately to a financial collapse.

The above should be supplemented by reading Paul Krugman's comments on the fate of democracy given the current depression.

Obama in Osawatomie

Here is Obama giving a key political speech calling for a better economic deal for the middle class:



My problem with Obama: he gives great rhetoric, but if you measure his promises in 2008 with his delivery over the past 3 years, it is clear that you can't trust what he claims to stand for.

I hope I'm wrong and Obama truly is going to support a more progressive agenda for America. The bottom 99% really do need a new deal that ends the war on the bottom 99% by the ultra-rich that has been going on for 30+ years in America.

Here is Robert Reich's take on Obama's Osawatomie speech:

The President’s speech today in Osawatomie, Kansas — where Teddy Roosevelt gave his “New Nationalism” speech in 1910 — is the most important economic speech of his presidency in terms of connecting the dots, laying out the reasons behind our economic and political crises, and asserting a willingness to take on the powerful and the privileged that have gamed the system to their advantage.

Here are the highlights (and, if you’ll pardon me, my annotations):

For most Americans, the basic bargain that made this country great has eroded. Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefitted from that success. Those at the very top grew wealthier from their incomes and investments than ever before. But everyone else struggled with costs that were growing and paychecks that weren’t - and too many families found themselves racking up more and more debt just to keep up.

He’s absolutely right – and it’s the first time he or any other president has clearly stated the long-term structural problem that’s been widening the gap between the very top and everyone else for thirty years – the breaking of the basic bargain linking pay to productivity gains.

For many years, credit cards and home equity loans papered over the harsh realities of this new economy. But in 2008, the house of cards collapsed.

Exactly. But the first papering over was when large numbers of women went into paid work, starting the in the late 1970s and 1980s, in order to prop up family incomes that were stagnating or dropping because male wages were under siege – from globalization, technological change, and the decline of unions. Only when this coping mechanism was exhausted, and when housing prices started to climb, did Americans shift to credit cards and home equity loans as a means of papering over the new harsh reality of an economy that was working for a minority at the top but not for most of the middle class.

We all know the story by now: Mortgages sold to people who couldn’t afford them, or sometimes even understand them. Banks and investors allowed to keep packaging the risk and selling it off. Huge bets - and huge bonuses - made with other people’s money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn’t have the authority to look at all.

It was wrong. It combined the breathtaking greed of a few with irresponsibility across the system. And it plunged our economy and the world into a crisis from which we are still fighting to recover. It claimed the jobs, homes, and the basic security of millions - innocent, hard-working Americans who had met their responsibilities, but were still left holding the bag.

Precisely – and it’s about time he used the term “wrong” to describe Wall Street’s antics, and the abject failure of regulators (led by Alan Greenspan and the Fed) to stop what was going on. But these “wrongs” were only the proximate cause of the economic crisis. The underlying cause was, as the President said before, the breaking of the basic bargain linking pay to productivity.

Ever since, there has been a raging debate over the best way to restore growth and prosperity; balance and fairness. Throughout the country, it has sparked protests and political movements - from the Tea Party to the people who have been occupying the streets of New York and other cities. It’s left Washington in a near-constant state of gridlock. And it’s been the topic of heated and sometimes colorful discussion among the men and women who are running for president.

But this isn’t just another political debate. This is the defining issue of our time. This is a make or break moment for the middle class, and all those who are fighting to get into the middle class. At stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.

Right again. It is the defining issue of our time. But I wish he wouldn’t lump the Tea Party in with the Occupiers. The former hates government; the latter focuses blame on Wall Street and corporate greed – just where the President did a moment ago.

Now, in the midst of this debate, there are some who seem to be suffering from a kind of collective amnesia. After all that’s happened, after the worst economic crisis since the Great Depression, they want to return to the same practices that got us into this mess. In fact, they want to go back to the same policies that have stacked the deck against middle-class Americans for too many years. Their philosophy is simple: we are better off when everyone is left to fend for themselves and play by their own rules.

He might have been a bit stronger here. The “they” who are suffering collective amnesia include many of the privileged and powerful who have gained enormous wealth by using their political muscle to entrench their privilege and power. In other words, it’s not simply or even mainly amnesia. It’s a clear and concerted strategy.

Well, I’m here to say they are wrong. I’m here to reaffirm my deep conviction that we are greater together than we are on our own. I believe that this country succeeds when everyone gets a fair shot, when everyone does their fair share, and when everyone plays by the same rules. Those aren’t Democratic or Republican values; 1% values or 99% values. They’re American values, and we have to reclaim them.

Amen.

…

In 1910, Teddy Roosevelt came here, to Osawatomie, and laid out his vision for what he called a New Nationalism. “Our country,” he said, “…means nothing unless it means the triumph of a real democracy…of an economic system under which each man shall be guaranteed the opportunity to show the best that there is in him.”

Some background: In 1909, Herbert Croly, a young political philosopher and journalist, argued in his best-selling The Promise of American Life that the large American corporation should be regulated by the nation and directed toward national goals. “The constructive idea behind a policy of the recognition of the semi-monopolistic corporation is, of course, the idea that they can be converted into economic agents…for the national economic interest,” Croly wrote. Teddy Roosevelt’s New Nationalism embraced Croly’s idea.

For this, Roosevelt was called a radical, a socialist, even a communist. But today, we are a richer nation and a stronger democracy because of what he fought for in his last campaign: an eight hour work day and a minimum wage for women; insurance for the unemployed, the elderly, and those with disabilities; political reform and a progressive income tax.

Today, over one hundred years later, our economy has gone through another transformation. Over the last few decades, huge advances in technology have allowed businesses to do more with less, and made it easier for them to set up shop and hire workers anywhere in the world. And many of you know firsthand the painful disruptions this has caused for a lot of Americans.

Factories where people thought they would retire suddenly picked up and went overseas, where the workers were cheaper. Steel mills that needed 1,000 employees are now able to do the same work with 100, so that layoffs were too often permanent, not just a temporary part of the business cycle. These changes didn’t just affect blue-collar workers. If you were a bank teller or a phone operator or a travel agent, you saw many in your profession replaced by ATMs or the internet. Today, even higher-skilled jobs like accountants and middle management can be outsourced to countries like China and India. And if you’re someone whose job can be done cheaper by a computer or someone in another country, you don’t have a lot of leverage with your employer when it comes to asking for better wages and benefits - especially since fewer Americans today are part of a union.

Now, just as there was in Teddy Roosevelt’s time, there’s been a certain crowd in Washington for the last few decades who respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If only we cut more regulations and cut more taxes - especially for the wealthy - our economy will grow stronger. Sure, there will be winners and losers. But if the winners do really well, jobs and prosperity will eventually trickle down to everyone else. And even if prosperity doesn’t trickle down, they argue, that’s the price of liberty.

It’s a simple theory - one that speaks to our rugged individualism and healthy skepticism of too much government. It fits well on a bumper sticker. Here’s the problem: It doesn’t work. It’s never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible post-war boom of the 50s and 60s. And it didn’t work when we tried it during the last decade.

Obama is advocating Croly’s proposal that large corporations be regulated for the nation’s good. But he’s updating Croly. The next paragraphs are important.

Remember that in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history, and what did they get us? The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class - things like education and infrastructure; science and technology; Medicare and Social Security.

Remember that in those years, thanks to some of the same folks who are running Congress now, we had weak regulation and little oversight, and what did that get us? Insurance companies that jacked up people’s premiums with impunity, and denied care to the patients who were sick. Mortgage lenders that tricked families into buying homes they couldn’t afford. A financial sector where irresponsibility and lack of basic oversight nearly destroyed our entire economy.

We simply cannot return to this brand of you're-on-your-own economics if we’re serious about rebuilding the middle class in this country. We know that it doesn’t result in a strong economy. It results in an economy that invests too little in its people and its future. It doesn’t result in a prosperity that trickles down. It results in a prosperity that’s enjoyed by fewer and fewer of our citizens.

Look at the statistics. In the last few decades, the average income of the top one percent has gone up by more than 250%, to $1.2 million per year. For the top one hundredth of one percent, the average income is now $27 million per year. The typical CEO who used to earn about 30 times more than his or her workers now earns 110 times more. And yet, over the last decade, the incomes of most Americans have actually fallen by about six percent.

The very first time the President has emphasized this grotesque trend. Now listen for how he connects this with the deterioration of our economy and democracy:

This kind of inequality - a level we haven’t seen since the Great Depression - hurts us all. When middle-class families can no longer afford to buy the goods and services that businesses are selling, it drags down the entire economy, from top to bottom. America was built on the idea of broad-based prosperity - that’s why a CEO like Henry Ford made it his mission to pay his workers enough so that they could buy the cars they made. It’s also why a recent study showed that countries with less inequality tend to have stronger and steadier economic growth over the long run.

Inequality also distorts our democracy. It gives an outsized voice to the few who can afford high-priced lobbyists and unlimited campaign contributions, and runs the risk of selling out our democracy to the highest bidder. And it leaves everyone else rightly suspicious that the system in Washington is rigged against them - that our elected representatives aren’t looking out for the interests of most Americans.

More fundamentally, this kind of gaping inequality gives lie to the promise at the very heart of America: that this is the place where you can make it if you try. We tell people that in this country, even if you’re born with nothing, hard work can get you into the middle class; and that your children will have the chance to do even better than you. That’s why immigrants from around the world flocked to our shores.

And what it’s done to equal opportunity, and how it’s eroded upward mobility:

And yet, over the last few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk. A few years after World War II, a child who was born into poverty had a slightly better than 50-50 chance of becoming middle class as an adult. By 1980, that chance fell to around 40%. And if the trend of rising inequality over the last few decades continues, it’s estimated that a child born today will only have a 1 in 3 chance of making it to the middle class.

It’s heartbreaking enough that there are millions of working families in this country who are now forced to take their children to food banks for a decent meal. But the idea that those children might not have a chance to climb out of that situation and back into the middle class, no matter how hard they work? That’s inexcusable. It’s wrong. It flies in the face of everything we stand for.

What should we do about this? Not turn to protectionism or become neo-Luddites. Nor turn to some version of government planning.

Fortunately, that’s not a future we have to accept. Because there’s another view about how we build a strong middle class in this country - a view that’s truer to our history; a vision that’s been embraced by people of both parties for more than two hundred years.

It’s not a view that we should somehow turn back technology or put up walls around America. It’s not a view that says we should punish profit or success or pretend that government knows how to fix all society’s problems. It’s a view that says in America, we are greater together - when everyone engages in fair play, everyone gets a fair shot, everyone does their fair share.

So what does that mean for restoring middle-class security in today’s economy?

It starts by making sure that everyone in America gets a fair shot at success. The truth is, we’ll never be able to compete with other countries when it comes to who’s best at letting their businesses pay the lowest wages or pollute as much as they want. That’s a race to the bottom that we can’t win - and shouldn’t want to win. Those countries don’t have a strong middle-class. They don’t have our standard of living.

In 1910, Teddy Roosevelt came here, to Osawatomie, and laid out his vision for what he called a New Nationalism. …

The fact is, this crisis has left a deficit of trust between Main Street and Wall Street. And major banks that were rescued by the taxpayers have an obligation to go the extra mile in helping to close that deficit. At minimum, they should be remedying past mortgage abuses that led to the financial crisis, and working to keep responsible homeowners in their home. We’re going to keep pushing them to provide more time for unemployed homeowners to look for work without having to worry about immediately losing their house.

I wish the Obama administration had made this a condition for the banks receiving bailouts.

But there’s far more to the speech. Read it in full. It lays out the basis for what could be the platform Obama will run on in 2012 — increasing taxes on the rich, investing in the rest us, requiring corporations and Wall Street banks that reap benefits from being in America create good jobs for Americans, and protecting our democracy from being corrupted by money — a new New Nationalism.

Here, finally, is the Barack Obama many of us thought we had elected in 2008. Since then we’ve had a president who has only reluctantly stood up to the moneyed interests Teddy Roosevelt and his cousin Franklin stood up to.

Hopefully Obama will carry this message through 2012, and gain a mandate to use his second term to take on the growing inequities and game-rigging practices that have been undermining the American economy and American democracy for years.

If you don't read Robert Reich's blog, you should be. As his blurb on his blog points out, here is uniquely qualified to provide insight into the economy & politics of today:

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including The Work of Nations, Locked in the Cabinet, Supercapitalism, and his most recent book, Aftershock. His "Marketplace" commentaries can be found on publicradio.com and iTunes. He is also Common Cause's board chairman.

Update 2011dec08: In contrast to Robert Reich's hopefulness about Obama, here is a strongly negative response by Yves Smith at her Naked Capitalism blog:

Wow, I have to hand it to Obama’s spinmeisters. They’ve managed to find a way to resurrect his old hopium branding by calling it something completely different that still has many of the old associations.

And we have a twofer in Obama’s launch of his new branding as True Son of Teddy Roosevelt. Never mind that Teddy, unlike Obama, was accomplished in many walks of life and had meaningful political accomplishments (such as reforming the corrupt New York City police department) before becoming President at the tender age of 42. The second element of this finesse is that Obama is using the Rooseveltian imagery to claim he will pass legislation to get tough on Big Finance miscreants. That posture, is of course meant to underscore the idea that you just can’t get the perps with the present, weak set of laws.

...

While we have the Feds insisting that it’s just too hard to go after miscreants in finance, this week we have Nevada Attorney General Catherine Cortez Masto continuing with her step-by-step, classic prosecution strategy of going after low level organization members to roll the higher ups. As we’ve indicated, she has targeted Lender Processing Services and is going after more mid level employees. Her effort has the potential to bust open bad conduct across all major servicers. LPS has among other things, allegedly engaged in escrow abuses and charging other impermissible fees, as well as foreclosure related abuses. LPS maintains that everything it did was with the full knowledge and approval of its clients, meaning the big servicers.

And the reach of Masto’s effort, and the potential damage to the Administration’s credibility has just grown considerably. Yesterday, California attorney general Kamala Harris joined the Masto effort. This strongly suggests that Harris will also be seeking indictments. And remember, California, unlike Nevada, has a major bank headquartered in state (Wells) as well as other substantial banking operations (the legacy Countrywide units). For Harris, who is reputed to be, shall we say it politely, sensitive to the political winds, to make a shift like this, suggests a real change in the political climate is underway.

...

The list of evidence supporting this view is so lengthy that I am certain to miss quite a few items: the lack of serious investigation, the phony stress tests, the perpetually missing in action DOJ, allowing the banks to exit the TARP pronto, the mortgage fraud whitewash investigation, the clever sidelining of Elizabeth Warren, the way too weak Dodd Frank legislation, which is being watered down further with the blessing of Timothy Geithner. And speaking of legislation, gee, if it was really that hard to prosecute bank miscreants, why wasn’t that incorporated in Dodd Frank? Awfully convenient to notice that supposed oversight now, with no hope of getting a tough bill passed at this juncture and statutes of limitations running out.

Frankly, the fact that the Administration has joined Khuzami in the “oh, it’s SO hard to prosecute” messaging leads me to believe the SEC really will throw the case. It’s plenty clear this Administration has let the people who really count know it has no intention of ever carrying a stick.

Taibbi on the Two-Tier Legal System in the US

Here is a bit from an excellent post by Matt Taibbi in his Rolling Stone blog:

In one of the more severe judicial ass-whippings you’ll ever see, federal Judge Jed Rakoff rejected a slap-on-the-wrist fraud settlement the SEC had cooked up for Citigroup.

I wrote about this story a few weeks back when Rakoff sent signals that he was unhappy with the SEC’s dirty deal with Citi, but yesterday he took this story several steps further.

Rakoff’s 15-page final ruling read like a political document, serving not just as a rejection of this one deal but as a broad and unequivocal indictment of the regulatory system as a whole. He particularly targeted the SEC’s longstanding practice of greenlighting relatively minor fines and financial settlements alongside de facto waivers of civil liability for the guilty – banks commit fraud and pay small fines, but in the end the SEC allows them to walk away without admitting to criminal wrongdoing.

This practice is a legal absurdity for several reasons. By accepting hundred-million-dollar fines without a full public venting of the facts, the SEC is leveling seemingly significant punishments without telling the public what the defendant is being punished for. This has essentially created a parallel or secret criminal justice system, in which both crime and punishment are adjudicated behind closed doors.

...

Judge Rakoff blew a big hole in that practice [the SEC’s longstanding practice of greenlighting relatively minor fines and financial settlements alongside de facto waivers of civil liability for the guilty – banks commit fraud and pay small fines, but in the end the SEC allows them to walk away without admitting to criminal wrongdoing] yesterday. His ruling says secret justice is not justice, and that the government cannot hand out punishments without telling the public what the punishments are for. He wrote:

Finally, in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers. Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency's contrivances.

Notice the reference to how things are “in much of the world,” a subtle hint that the idea behind this ruling is to prevent a slide into third-world-style justice.

...

Here’s a clip of me talking about the ruling last night on Countdown with Keith Olbermann.

Since Obama and his Attorney General aren't willing to treat crime seriously, hopefully the courts will step up and give the American people some justice.

The Whole Dirty, Ugly $7.77 Trillion Truth is Now Revealed

The secret actions of the US government to keep the US banking system from complete collapse are now available. You can now read the gory details of how the US government "on behalf of the taxpayers gave away $1.2 trillion on Dec. 5, 2008 and, when you add up all the "free money" the banks got, it totals $7.77 trillion.

From a Bloomberg News article:

Secret Fed Loans Helped Banks Net $13B

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.

A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

“When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio who in 2010 introduced an unsuccessful bill to limit bank size. “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”

The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News, won a court case against the Fed and a group of the biggest U.S. banks called Clearing House Association LLC to force lending details into the open.

...

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”

...

The Fed says it typically makes emergency loans more expensive than those available in the marketplace to discourage banks from abusing the privilege. During the crisis, Fed loans were among the cheapest around, with funding available for as low as 0.01 percent in December 2008, according to data from the central bank and money-market rates tracked by Bloomberg.

The Fed funds also benefited firms by allowing them to avoid selling assets to pay investors and depositors who pulled their money. So the assets stayed on the banks’ books, earning interest.

Banks report the difference between what they earn on loans and investments and their borrowing expenses. The figure, known as net interest margin, provides a clue to how much profit the firms turned on their Fed loans, the costs of which were included in those expenses. To calculate how much banks stood to make, Bloomberg multiplied their tax-adjusted net interest margins by their average Fed debt during reporting periods in which they took emergency loans.

...

The U.S. jobless rate hasn’t dipped below 8.8 percent since March 2009, 3.6 million homes have been foreclosed since August 2007, according to data provider RealtyTrac Inc., and police have clashed with Occupy Wall Street protesters, who say government policies favor the wealthiest citizens, in New York, Boston, Seattle and Oakland, California.

The Tea Party, which supports a more limited role for government, has its roots in anger over the Wall Street bailouts, says Neil M. Barofsky, former TARP special inspector general and a Bloomberg Television contributing editor.

“The lack of transparency is not just frustrating; it really blocked accountability,” Barofsky says. “When people don’t know the details, they fill in the blanks. They believe in conspiracies.”

In the end, Geithner had his way. The Brown-Kaufman proposal to limit the size of banks was defeated, 60 to 31. Bank supervisors meeting in Switzerland did mandate minimum reserves that institutions will have to hold, with higher levels for the world’s largest banks, including the six biggest in the U.S. Those rules can be changed by individual countries.

They take full effect in 2019.

Meanwhile, Kaufman says, “we’re absolutely, totally, 100 percent not prepared for another financial crisis.”

There is a lot more detail. Go read the whole article.

Freedom of the press is essential to a democracy. The fact that Bush and Obama administrations fought bitterly to prevent the electorate from knowing what sweetheart deals they gave the banks should be fully understood by American citizens. The US government is deeply corrupted by the banking system.

The fact that nobody has gone to jail for the multiple trillion dollar fraud committed by banks, mortgage brokers, assessors, ratings companies, and the big Wall Street banks that "financialized" junk debt into AAA bonds that quickly went bankrupt cries out for justice. The US government is fighting this tooth-and-nail. Heads must roll. The corruption must be rooted out.

The Occupy Wall Street and the Tea Party movements both agree on this one fact: the US political system has been corrupted by the banks.

Worst of all, the ultra-rich show complete contempt for the bottom 99%, the ordinary taxpayers and working stiffs, who don't get tax cuts and "special deals" from the government:

Slaying the Same Dragon Again and Again and Again

Here is poor Paul Krugman dealing with a zombie myth of the political right in America: that Obama has "expanded government":

... what I’m seeing in comments and reactions, once again, is the claim that Obama has presided over a vast expansion of government — a claim backed not by describing any specific programs, but by pointing to the share of federal spending in GDP. Indeed, federal spending rose from 19.6% of GDP in 2007 to 23.8% in 2010 (it was briefly 25 in 2009, but that was a number distorted by the financial bailouts). So there has been a roughly 4 points of GDP rise in the spending share. What’s that about?

Well, part of the answer is that the ratio is up because the denominator is down. According to CBO estimates, in fiscal 2010 the economy operated about 7 percent below potential. This means that even if what the government was doing hadn’t changed, the federal spending share of GDP would have risen by 1.4 percentage points.

Then, look inside the budget data (pdf), specifically at Table E-10. You’ll see a surge in spending on “income security”; that’s basically unemployment insurance, food stamps, and similar items. In other words, spending on safety-net programs is up because the economy is depressed, and more people are falling into the safety net.

You’ll also see a sharp rise in Medicaid; again, this is because the lousy economy has pushed more people into hardship, making them eligible for the program.

I’ve done a bit of number-crunching, and here’s my allocation of the sources of the rise in federal spending as a share of GDP:
Click to Enlarge
So a depressed economy plus safety net programs that have grown as a result of a depressed economy are, overwhelmingly, the real story here.

What’s in that “other” category? Some of it is stimulus spending. Some of it is the leading wave of the baby boomers, who are starting to collect Social Security and enter Medicare. Some of it is rising health care costs.

What isn’t there, no way, nohow, is a massive expansion of government, which is a figment of the right wing’s imagination.

When a political party keeps repeating a lie, it is proves a complete disregard for honesty and truth. Only the power mad would repeat a discredited view. They know that the informed will be outraged, but they count on the fact that most people eitehr haven't heard that it is a lie, forgotten that it is a lie, or don't care if it is a lie. In short, they are appealing the ignorance and cynicism of marginal people.

This is how "family values" politicians can be continually caught in affairs with prostitutes or exercising serial polygamy by marrying and divorcing wife after wife while professing a "deep respect" for the family. Or to have the gall that one Republican, Joe Walsh, has of refusing to pay his legally obligated child support while running on "family values". Or pulling the Newt Gingrich stunt of divorcing a wife dying of cancer so that he can marry a pretty young thing while claiming to "respect" family values. So much for the "until death do us part" commitment of a family values man.

Right Wing Hysteria

The political right is in thrall to the ultra-rich who are always horrified by inflation because it can eat up their piles of money as a "hidden tax". But the reality is that, despite record deficits, the bond market is signaling no fear of inflation. But despite that, the Federal Reserve (and more especially the European Central Bank) are still rigorously fighting "inflation" while their economies erode into depression and inflation soars.

Here is a bit by PBS's Paul Solman:

... checking with NYU's celebrated economic historian Richard Sylla, we find that today's rates are astonishingly close to the lowest in the entire history of the United States: 1.85 percent, the nadir reached in late 1941. That was the record, I should say -- until September 22, when the 10-year U.S. interest rate plunged briefly to 1.695 percent.

So what's going on? Well, rather obviously, investors are a lot more worried about the credit of Greece -- or Spain or Italy -- than ours. Investors are also more worried about stock investments. Investors are also more worried about almost any other asset into which they might put their money.

Investors also seem pretty sure that U.S. inflation is not going to be a problem anytime soon. If inflation scared them, they'd hardly let the United States lock in an interest rate of less than 2 percent for an entire decade.

So then why isn't it plausible to draw the following conclusion: that U.S. interest rates have been going in the "wrong" direction because investors are scared that the U.S. is going to reduce its debt and deficits, and such a reduction might horse-collar the world economy?

In other words, might the true story plausibly be a complete contradiction of what is regularly reported? That's what Nobel laureate Paul Krugman of the New York Times has regularly argued, but his "opinion" hasn't managed to leak into everyday coverage.

Obama needs a massive WPA program. In fact the whole developed world needs to do deficit spending to revive the economy. In the meantime, they should re-regulate the bank with even more severe regulations than were brought in post-Great Depression and the bankers of the 1990-2008 era should all be jailed with long, long sentences. These thieves stole trillions of dollars from the bottom 99%. They make Bernard Madoff look like a piker and the corner store robber a joke. The real crime in America is in the boardroom and the legal system needs to go after these malfactors with a vengeance.

Instead of "inflation" being the enemy of the country, the real enemy is austerity imposed by the political right and their ultra-rich patrons, the 0.01%. The financial reality is that bond prices are showing deflation and into "inflation" as the biggest threat to America:

The United States has to pay less than two percent to borrow money for 10 years? That's anti-Chicken Little. Not the sky falling, but the interest rate plummeting. Exactly the opposite of all the dire warnings.

Okay, but we need a little context. How far has the rate fallen? Let's go to Yahoo! Finance for a chart. There, on the right, is a blue chart of the 10-year rate over the past year. OMG! It's down from 3.5 percent since about April. April. What happened in April?

Oh, right. S&P downgraded U.S. debt. (See note.) But wait a second. The bond vigilantes should then have forced us to raise our interest rate. Instead, they lowered it?

Okay, maybe April was an anomaly. So click on "5y" under the chart for a view of the rate over the past five years. Can it be? It looks like the 10-year rate is at the lowest point over the entire period! Lower even than in the depths of despair, the post-Lehman crash of late 2008.

One more attempt at context. Go to Bob Shiller's online chart, then open the Excel file to which this links. You'll find a chart of stock prices, in blue, and the 10-year bond rate, in red, reaching back into the nineteenth century. You'll note that today's 1.97 percent is about as low as our interest rate has ever sunk since at least 1880.

Obama's "Hopey Changey" Leadership

Obama campaigned in 2008 to change politics in America. He promised "hope" and "change you can believe in" and "transparency". Sarah Palin nailed him when she mocked him for his "hopey changey" thing.

What you are getting today under Obama is a people being beaten by police baton sticks and pepper sprayed as they attempt to give voice to their political will in a supposedly democratic 1st Amendment right. The Occupy Movement is growing and Obama is "missing in action". He fails to lead. He is a politician who loves to make promises, but he has done precious little during 3 years to help the bottom 99% in America...


The reality is that he hasn't stopped American military torture, he hasn't closed Guantanamo, he allows American citizens to be assassinated without any judicial process, he has paid hundreds of billions to his buddies on Wall Street and half a billion to his buddy in the "green" industry of now bankrupt Solyndra. He promise of "transparency" in government has instead produced the harshest anti-whistle-blower law ever on US books. He fiddles for 3 years during the greatest recession since the Great Depression then announces that he is Mr. Jobs, Jobs, Jobs and announces a program to produce 1.2 million jobs when in fact there are 25 million unemployed/underemployed people, in short, he makes a political gesture but no effective political act. He is a farce. A joke.

The US has two parties to represent the 1% and no political parties that represent the 99%. Tragic.

America's Great Recession

The failure of Bush and now Obama to seriously engage in stimulating a failing economy has created a "lost decade". From Calculated Risk, here is a graph that shows the great chasm of lost jobs compared to other post-WWII recessions:

Click to Enlarge
The inability of America's political leadership to break the bonds of servitude to Wall Street and big corporate interests means that the bottom 99% will pay and continue to pay for the sins of the political leadership and the rich elite in the US. Tragic.

The Numbed Electorate

Here is a nice insight by Robert Reich into 2012's presidential election. He expects it to be a mind-numblingly dull experience:

... paradoxically the presidential race that officially begins a few months from now is likely to be as passionless as they come.

President Obama will be supported by progressives and the Democratic base, but without enthusiasm. His notorious caves to Republicans and Wall Street — failing to put conditions on the Street’s bailout (such as demanding the Street help stranded home owners), or to resurrect Glass-Steagall, or include a public option in health care, or assert his constitutional responsibility to raise the debt limit, or protect Medicare and Social Security, or push for cap-and-trade, or close Guantanamo, or, in general, confront the regressive Republican nay-sayers and do-nothings with toughness rather than begin negotiations by giving them much of what they want — are not the stuff that stirs a passionate following.

Mitt Romney will surely be the Republican presidential candidate — and Romney inspires as little enthusiasm among Republicans as Obama does among Democrats. The GOP will support Romney because, frankly, he’s the only major Republican primary candidate who does not appear to the broader public to be nuts.

But Republicans don’t like Romney. His glib, self-serving, say-whatever-it-takes-to-win-the primaries approach strikes almost everyone as contrived and cynical. Moreover, Romney is the establishment personified — a pump-and-dump takeover financier, for crying out loud — at the very time the GOP (and much of the rest of the country) are becoming more anti-establishment by the day.

At this point neither the Republican right nor the mainstream media wants to admit the yawn-inducing truth that Mitt will be the GOP’s candidate. The right doesn’t want to admit it because it will be seen as a repudiation of the Tea Party. The media doesn’t want to because they’d prefer to sell newspapers and attract eyeballs.

The media are keeping the story of Rick Perry’s cringe-inducing implosion going for the same reason they’re keeping the story of Herman Cain’s equally painful decline going — because the public is forever fascinated by the gruesome sight of dying candidacies. With Bachmann, Perry, and Cain gone or disintegrating, the right wing-nuts of the GOP have only one hope left: Newt Gingrich. His star will rise briefly before he, too, is pilloried for the bizarre things he’s uttered in the past and for his equally bizarre private life. His fall will be equally sudden (although I don’t think Gingrich is capable of embarrassment).

And so we’ll be left with two presidential candidates who don’t inspire — at the very time in American history when Americans crave inspiration.

Instead of a big debate about the basics (how to truly restore jobs and wages, financial capitalism versus product capitalism, the place and role of America in the world, how to rescue our democracy), we’re likely to have a superficial debate over symbols (the budget deficit, the size of government, whether we need a “businessman” at the helm).

This means political passions are likely to move elsewhere — finding their voices in grass-roots movements, social media, demonstrations, boycotts, and meet-ups — on the Main Streets and in the backwaters, and only episodically in the mainstream media or in normal election-year events.

In some ways this may not be such a bad thing. The regressive right has had thirty years to build itself into a political power. Newly-energized progressives (Occupiers and others) need enough time to develop concrete proposals and strategies. What’s the rush? If polls are to be believed, most of the nation is progressive, not regressive (witness last Tuesday’s results in Wisconsin and elsewhere). So it is, after all, only a matter of time.

Yet viewed another way, a passionless presidential race may be dangerous for America. The nation’s problems may not wait. They require bold action, and soon.

I'm willing to believe the scenario that Reich is laying out. The tragedy of US politics is that all of the politicians, left and right, is corrupt and "owned" by the top 0.01%. What is the point in taking "politics" seriously if there is no connection between what the candidate says and what the candidate does. Right now, the real agenda of the politicians is that one dictated by the ultra-rich. They promise wonderful things as candidate, but don't deliver becaus they are bought-and-sold by the rich who dictate their votes.

The Depth of the US Housing Depression

Here are some facts from a story in Vegas Inc:

“In less than four years, more than 100,000 homes in Las Vegas have been lost through foreclosure. That’s 18 percent of our privately owned housing stock: that’s nearly one home in five. And we’re nowhere near finished with foreclosures. In all likelihood, we have another 100,000 yet to go, and at the current rate, that’s another four years,” Murphy said.

And this has hit house prices hard. Just in the last year:

In a market hit by high unemployment (13.6 percent) and an elevated foreclosure rate, the Realtors said the median price of single-family homes sold in October was $121,000. That’s down 1.9 percent from $123,400 in September and down 9 percent from $133,000 a year ago.

From the Calculated Risk site, the price of homes in Las Vegas is down 60% since the beginning of 2007:

Click to Enlarge
What is tragic is that the Republicans caused this Great Recession during the Bush administration and are doing everything they can to make it worse in order to win in 2012. And the salt in the wound is that Barack Obama had a chance to come in and really push hard to save Main Street after the failure of Wall Street, but he played "political games" and undersized the stimulus in early 2009 and then claimed it was "just right" in size when it was clearly too small and dithered for two and a half years before he got serious about attacking unemployment and the crushed economy... just in time to win another 4 years for his "do nothing" administration. Tragic.

How $700 Billion in Bad Debts Destroyed the World Economy

Want to understand how $700 billion in bad loans could take down a $14 trillion US economy and a $70 trillion world economy?

In an infamous speech on May 17, 2007 Ben Bernanke assured the world that the size of "bad loans" was limited and any problem with defaults would be "contained" and not have a big effect on the world's economy:

All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.

But as Matt Taibbi points out, the banks took that bad debt and effectively xeroxed it again and again makes copy after copy that it sold into the world's "derivatives" market ballooning the real losses up into trillions and trillions that were untraceable because the idiot US government under Greenspan, Bernanke, Summers, Rubin, and Geithner refused to regulate the derivatives markets despite the efforts by Brooksley Born to try and regulate it.

Here is the relevant bit from a post by Matt Taibbi on his Rolling Stone blog. Look at the bolded bit for the key fact:

Apparently people feel that by explaining how the banks profited from the explosion of subprime home loans, I’m somehow letting the ordinary homeowner who over-borrowed off the hook.

But the question was never, Do ordinary homeowners share any blame for the crisis? The question, as implicitly posed by Bloomberg, was, Is it true that the banks had NO blame for the crisis?

We can all argue about how big of a slice of the blame pie should be doled out to other actors – the irresponsible homeowner, the corrupted ratings agency analyst, the sleeping regulator, the do-gooder liberal congressman, etc. – later on. But what the mayor said, and Wall Street flaks have been saying for years, is that the banks shouldn’t eat any of that pie, and that they only made those loans because they were forced to, by Barney Frank and Franklin Raines and other such liberal meddling kids.

So let’s examine that for a minute.

For one thing, we know, because of investigations like Carl Levin’s inquiry into Washington Mutual and its subsidiary Long Beach, that these banks were often well aware that fly-by-night lenders like Countrywide and Long Beach were committing fraud on a massive scale – and bought their loans anyway, knowing they could still sell them off on the secondary market.

In 2005, for instance, Washington Mutual did an internal audit of two of Long Beach’s biggest offices, one in Downey, California, and one in Montebello, California. They found that 53 percent of the Downey loans involved some type of fraud, while the number in Montebello was 83 percent. The internal investigation drummed up the usual litany of unsafe financial sexual practices, using white-out to disguise low income levels, cutting and pasting info from good borrowers onto the loan applications of less worthy applicants, and so on.

So you know what WaMu did about all that fraud they found? Zip.

The company overrode its auditors and sold those phony loans off into the market anyway. And internally, they did nothing to change lending practices. WaMu did a follow-up investigation in 2007, and found the fraud rate at Montebello was still 62 percent.

So forget about the banks being dragged, kicking and screaming, to take on even legitimate loans for unworthy, overextended homeowners. Not only did the banks willingly take on every conceivable real home loan, government-backed or not – they even wanted the fraudulent loans, the loans that were not just likely to fail but virtually guaranteed to fail.

Why? Because they could. Because they were making huge profits hawking these bad loans to third-party customers who didn’t know what they were buying.

But here's the real kicker: when the banks milked the Countrywides and Long Beaches dry, and ran out of real people with pulses to lend homes to, they went out and made derivative copies of those "unworthy” lenders supposedly forced upon them by Barney Frank, and sold those copies off on the secondary market.

In other words, they were so “reluctant” to give that Oakland janitor a house that once they had his loan on their books, they promptly Xerox-copied him in the form of synthetic derivatives (essentially, bets on his home loan) and sold him off in five, ten, fifteen different directions. Janitor takes out home loan, bank tells two friends, and those friends tell two friends, and so on, and so on. The banks sold every one of those endlessly-replicating little squares and made cold hard cash each time.

You remember that notorious Abacus deal that Goldman Sachs was involved with, the one in which a pair of European banks, the Dutch bank ABN-Amro and the German Bank IKB, lost a billion dollars buying a portfolio of designed-to-fail mortgage-backed instruments hand-picked by a short selling billionaire named John Paulson?

Well, that portfolio that Goldman and Paulson dumped on those two banks was not, in fact, a portfolio of real subprime home loans. It was a synthetic CDO – a giant package of bets on subprime home loans.

Mike Bloomberg wants you to believe the banks didn’t want anything to do with those unworthy borrowers. Yet in reality, the banks not only went to every conceivable length to take on the home loans of those subprime borrowers, they actually invented new technology to make clones of those Barney Frank debtors.

And there were thousands upon thousands of those synthetic deals, meaning each and every of those deadbeat subprime borrowers have been Xeroxed by the banks fifty or a hundred times over, and are flying around the globe to this day as toxic assets.

Nomi Prins pointed out in her book It Takes a Pillage that we could have paid off every subprime loan in America at the start of the crisis for about $1.4 trillion dollars. But the bailouts ended up being four, five, perhaps as much as ten or twelve times that size.

Why? Because we weren’t paying off the underlying loans of those subprime, personal-responsibility-deficient homeowners. We were paying off the banks' bets on those loans. We were adopting all those clones they made.

Anyway, there's is a massive gap between making a bad decision with one’s personal finances and committing criminal fraud in billion-dollar amounts. Morally, the two acts are not even in the same universe.

The real crime is that Bush's administration refused to regulate the financial system and the Obama administration has refused to clean up Bush's mess and prosecute the trillion dollar fraud that destroyed the world's economy.

Get Ready for Another Big Bailout

Here is a bit from a post by Matt Taibbi in his Rolling Stone blog:

... when it comes to commercial banking, Bank of America is as bad as it gets.

The markets, of course, have lately come to agree, as B of A has lately been downgraded again to just above junk status. The only reason the bank is not rated even lower than that is that it is Too Big To Fail. The whole world knows that if Bank of America implodes – whether because of the vast number of fraud suits it faces for mortgage securitization practices, or because of the time bomb of toxic assets on its balance sheets – the U.S. government will probably step in to one degree or another and save it.

The government’s patronage of the bank was never clearer than in recent weeks, when B of A quietly decided to move trillions of dollars (trillions, not billions) in risky Merrill Lynch derivatives contracts off Merrill’s books and onto the books of the parent/retail arm, Bank of America.

This decision was done at the behest of counterparties to those transactions, who wanted those contracts placed under the aegis of Bank of America, whose deposits are insured by the FDIC. The move was made, according to reports, so that Bank of America could avoid posting $3.3 billion in collateral to satisfy the company’s creditors. In other words, Bank of America just got You the Taxpayer to co-sign as much as $53 trillion worth of dicey derivative contracts.

The FDIC wasn’t pleased by the move, but the Fed apparently encouraged it. Bloomberg, citing people with “direct knowledge” of the deals, reported that,

The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

So the primary regulator of the banking industry is encouraging a functionally insolvent megabank to respond to a credit downgrade by pushing its most explosively risky holdings onto the laps of the taxpayer.

...

A series of lawmakers on the Hill, including most notably Sherrod Brown, Carl Levin, and Bernie Sanders, are trying to figure out if there’s any way to stop this transaction, but of course there is not. Upstate NY congressman Maurice Hinchey put it best. "What Bank of America is doing is perfectly legal – and that's the problem,” he said.

This is exactly why the Glass-Steagall Act needs to be reinstated: without a separation of Investment Banks and Commercial Banks, what we end up getting is taxpayer-guaranteed gambling. Instead of encouraging prudence and savings by insuring deposits in commercial banks, the FDIC is now being turned into a vehicle for socializing speculative losses.

So our government is not only no longer encouraging fiscal conservatism, it is doing exactly the opposite, i.e. encouraging speculation and risk-taking. That this is happening in the fever of the OWS movement, and at a time when top politicians from Barack Obama on down are paying lip service to public complaints against Wall Street, should tell you everything you need to know about whether or not we can expect this government to voluntarily enact real changes, and stop making the taxpayer eat Wall Street’s pain.

This is criminal. The FDIC should refuse. But obviously the Obama administration is backing the Federal Reserve and allowing this abomination to go ahead. Shame on Barack Obama!