Quote of the day, is our children learning edition; or, measure everything and don’t do anything you can’t measure

From Kay at Balloon Juice, with emphasis in the original except where noted:

Michelle Rhee came to Ohio and lobbied my state legislature on her last national tour. She was treated like a celebrity. No one questioned any of her claims, which is unsurprising if you actually live in this state because all of her reforms involve union busting, pension looting and shifting public money to private operators(emphasis added). She’s a Right wing ideologue’s dream come true. They bought it because they believed it before she walked onto the floor that day.

The school reform industry response to the Atlanta cheating scandal was to call for better test security. As usual, the reform industry spokespeople are missing the larger point, the bigger picture. The truth is they based their reforms on high profile “turn arounds” in Atlanta and (especially) DC. If the scores in these places where they ran their experiments were bullshit, they “reformed” the US education system based on bullshit. They’re supposedly “data-driven” and most of them are billionaires. I shouldn’t have to point this out.

Hire an independent prosecutor like they did in Atlanta. Let’s find out. In the meantime, get a different opinion on “school reform.” Stop relying on the billionaires who backed this, the politicians who swallowed it without question, the hundreds of lobby shops who now exist because of it and the celebrities who promote it to evaluate it. They’re biased, they’re all in, they believe they are the “best and the brightest” and the top-tier analysts and executives are making a lot of money. It’s a recipe for disaster.

Well, disaster for ordinary taxpayers. For the grifters (and, remember, grifters are gonna grift), not so much.

The 70-year-old economic priorities of an old-school conservative

Winston Churchill, March 1943:

… let me remark that the best way to insure against unemployment is to have no unemployment.* …

Next there is the spacious domain of public health. I was brought up on the maxim of Lord Beaconsfield which my father was always repeating: “Health and the laws of health.” We must establish on broad and solid foundations a national health service. Here let me say that there is no finer investment for any community than putting milk into babies. Healthy citizens are the greatest asset any country can have.

Following upon health and welfare is the question of education…. In moving steadily and steadfastly from a class to a national foundation in the politics and economics of our society and civilization, we must not forget the glories of the past nor how many battles we have fought for the rights of the individual and for human freedom. We must beware of trying to build a society in which nobody counts for anything except the politician or an official, a society where enterprise gains no reward and thrift no privileges. I say “trying to build” because of all the races in the world our people would be the last to consent to be governed by a bureaucracy. Freedom is their life blood….

It is in our power, however, to secure equal opportunities for all. Facilities for advanced education must be evened out and multiplied. No one who can take advantage of higher education should be denied this chance. You cannot conduct a modern community except with an adequate supply of persons upon whose education, whether humanitarian, technical or scientific, much time and money have been spent….

Interesting, isn’t it, that those who now call themselves conservative are so actively fighting that for which Winston Churchill stood when few national leaders in history have been proven so right as he? Thom Tillis and Phil Berger, y’all might want to listen to and learn from your philosophical and moral better.

*That’s not as stupid as it sounds. In context, it means putting people to work even if doing so requires running larger deficits in the short term.

An imagination beyond one’s tribe

Quote of the day, from Sir Charles at Cogitamus:

I have been a liberal for a long time as have many of the people I’ve known.  And let me assure you, it wasn’t because back in 1980 or 1984 or 1988 all of the cool kids were doing the liberal thing and supporting food stamps.  It was because I — like most people who hung in there during the Reagan years — had the moral imagination to consider what life might have been like if I lost the lottery and was born poor.  It was because a study of history led me to understand how tenuous the climb to middle class status had been for so many people and how much the government giving people a hand up had meant to vast swaths of society.  I was a white male middle class kid, but I understood that the world was bigger than my tribe, a spirit that continues to animate most people on the left.  I did not grow up in an ideological household.  … [My parents] were both very devoted to overall notions of fairness.  (Neither has voted for a Republican since 1976 — I take some of the credit.)  I took that overall spirit of fairness and constructed a political view that struck me as consistent with it — a kind of Rawlsian view of the world long before I ever heard of John Rawls.

Emphasis added, because the concepts included therein are so critically important for a society to function.

“Moral imagination” is just another word for empathy. Without it, we are nothing more or less than sociopaths, we have way too many of those already and we are making more by the day.

The notion of life as lottery is something many conservatives and so-called libertarians find risible. But when you compare social mobility in the U.S. with that of other wealthy Western countries, you find something interesting and disturbing: Only the U.K. has less social mobility than we do.* Parents’ wealth is the biggest single predictor of offspring’s financial success. I suppose it was only coincidence that I learned today that Gov. Pat McCrory’s proposed budget would ax the state’s inheritance tax completely.

History does indeed show that a lot of people are middle-class today only because their ancestors who were not fought to be. The labor movement of the ’30s, the right of women to vote, the civil-rights movement, and perhaps most importantly the desegregation of K-12 schools and higher education in the face of bitter resistance, all played a part in helping to increase the size of the middle class. And it’s no coincidence that all these efforts are under attack today, or that those attacks are funded by a very small number of very wealthy people who think the Constitution mandates a plutocracy. I suppose it is only coincidence, then, that the same gov I mentioned a graf ago is attacking teaching the liberal arts (such as, oh, say, history) in the UNC system.

Yes, by hook and by crook, the gov and the thugs who fund him seem bent on keeping the proles proles and turning more non-proles into proles. Sir Charles suggests above that they do not understand that the world is bigger than their tribe. I think the problem is bigger than that. I think they understand and actively seek to screw everyone who is not part of their tribe, because this hypothesis is the simplest explanation for what is otherwise a set of decisions difficult to justify on grounds of fairness, practicality or public good.

Evidence to the contrary is welcome, but I’m not holding my breath.

*Corak, Miles. 2006. “Do Poor Children Become Poor Adults? Lessons from a Cross Country Comparison of Generational Earnings Mobility.” Research on Economic Inequality, 13 no. 1: 143-188.

Driftglass summarizes “Hubris” for you because I had to study

This is just a taste. And I am grateful to him for the service (which was live-tweeted, thus the weird diction/syntax in places; also, I did a quick search-and-replace on some of the more vapors-inducing participial adjectives):

• Remember David Brooks’ column calling people who opposed Wolfowitz antisemitic? No? That’s the firetrucking problem.
• Remember David Brooks’ columns mocking Liberals who opposed Iraq war as deluded Bush-deranged posers? No? That’s the firetrucking problem
• Remember David Brooks calling people cynical assholes who objected to Dubya’s flightsuit tango? No? That’s the firetrucking problem.
• Remember when the collaborators at the NYT gave a firetrucking weekly column to Bloody Bill Kristol? No? That’s the firetrucking problem.
• Remember when David Brooks leveraged his Liberal bashing tripe into a column-for-life at the NYT? No? That’s the firetrucking problem.
• Remember Steve Gilliard? No? That’s the firetrucking problem.
• Remember when the wingnutosphere went nuts trying to discredit every alarming report out of Iraq? No? That’s the firetrucking problem.
• Remember when palette-trucks of shrink- wrapped taxpayer cash just firetrucking vanished into Iraq? No? That’s the firetrucking problem.
• Remember when everything that is now settled history was America-hating surrender-monkey treason? No? That’s the firetrucking problem.
• Remember when a gay hooker Conservative “reporter” w/ a fake name sat 100 ft away from Dubya for 2 yrs? No? That’s the firetrucking problem
• Remember when Halliburton made $$ selling American soldiers in Iraq toilet water? No? That’s the firetrucking problem.
• Remember when the GOP made “[Forget] Reality” into American national policy? No? That’s the firetrucking problem.
• Remember when Phil Donahue got fired for telling the truth and Conservatives got promoted for lying? No? That’s the firetrucking problem.
• Remember how the Cheney clans got really, really rich sending kids off to die for their lies? No? That’s the firetrucking problem.
• Remember when 60 million Americans re-elected these deficit-creating war criminals? No? That’s the firetrucking problem.
• Remember the incompetent children of GOP campaign contributors were put in charge of governing Iraq? No? That’s the firetrucking problem.
• Remember when Fox News told soldiers rolling into battle to look into the camera and say “Fox Rocks!” No? That’s the firetrucking problem.

You know, I stack this list up against the whining from Politico reporters that I mentioned below, and I think perhaps I should call Mike Allen or Jim Vandehei at Politico and tell them, “There are better ways you could be spending your time, and some pseudonymous blogger in flyover country has just handed you a double fistful of them for free, so pack a lunch and get busy.“

That, also, is the polite version. Too. Here’s kind of what I really feel like saying.

Brian Moynihan can say only one thing to keep himself out of prison, and it’s a lie.

This one’s for my friends and family in Charlotte.

Brian Moynihan is the CEO of Bank of America. Last May, unbeknownst to most of us, he was deposed by lawyers for insurance companies suing Bank of America and Countrywide, the “mortgage” company that BofA acquired. The insurance companies lost a metric shit-ton of money because Countrywide spent years originating a boatload of mortgages to anyone with a pulse, mortgages that were doomed to fail, and then packaged and sold them as AAA-grade bonds, which were even more attractive investments at the time because MBIA and other prominent companies had insured them.

When BofA acquired Countrywide, for no small amount of money despite the company’s obvious worthlessness at that point, Moynihan famously promised to make good on all his company’s new acquisition’s misdeeds, a promise that, if kept, could render BofA so much more insolvent that even the government wouldn’t be able to ignore it any longer. And I haven’t kept close track, so this may all be over and done with, but Moynihan also may have legal problems with BofA stockholders who have claimed they weren’t fully informed of  Countrywide’s problems at the time of the acquisition, as securities law requires.

Anyway, this little Q&A between MBIA lawyers and Moynihan  runs on to 223 pages, and if we are to take its protagonist at his word — a dangerous thing to do, as we shall see in a moment — then he not only has no business serving as the CEO of anything more important than watching moss grow, he also desperately needs full-time dementia care. (And having had friends and relatives with Alizheimer’s, I don’t throw that metaphor out  lightly.)

Moynihan essentially had three choices in answering these questions. He could tell the truth and, in all likelihood, admit under oath to securities fraud, conspiracy and a host of other crimes. Or he could lie and say these things did not happen on his watch when they manifestly did, and face perjury charges. Or he could say he didn’t recall. (I suppose he had a fourth possibility, taking the Fifth Amendment, but a quick scan suggests he either didn’t do that or else did it very obliquely.)

Well, to absolutely no one’s surprise, Brian the Job Creator chose Door No. 3. At the moment, if you Google the phrase “great amnesiacs of history” in quotes, you get no hits. I suspect that’s about to change, as Matt Taibbi of Rolling Stone comments:

If you’re a court junkie, or have the misfortune (as some of us poor reporters do) of being forced professionally to spend a lot of time reading legal documents, the just-released Moynihan deposition in MBIA v. Bank of America, Countrywide, and a Buttload of Other Shameless Mortgage Fraudsters will go down as one of the great Nixonian-stonewalling efforts ever, and one of the more entertaining reads of the year.

In this long-awaited interrogation – Bank of America has been fighting to keep Moynihan from being deposed in this case for some time – Moynihan does a full Star Trek special, boldly going where no deponent has ever gone before, breaking out the “I don’t recall” line more often and perhaps more ridiculously than was previously thought possible. Moynihan seems to remember his own name, and perhaps his current job title, but beyond that, he’ll have to get back to you. …

Taibbi’s account alone is both hilarious and outrageous. Now that the semester is over, I can’t wait to read the actual deposition. (Hey, it’s how I roll.)

In the deposition, attorney Peter Calamari of Quinn Emmanuel, representing MBIA, attempts to ask Moynihan a series of questions about what exactly Bank of America knew about Countrywide’s operations at various points in time.

Early on, he asks Moynihan if he remembers the B of A audit committee discussing Countrywide. Moynihan says he “doesn’t recall any specific discussion of it.”

He’s asked again: In the broadest conceivable sense, do you recall ever attending an audit committee meeting where the word Countrywide or any aspect of the Countrywide transaction was ever discussed? Moynihan: I don’t recall.

Calamari counters: It’s a multi-billion dollar acquisition, was it not?

Moynihan: Yes, it was.

[Q:] Well, isn’t that the kind of thing you would talk about?

Moynihan: not necessarily . . .

This goes on and on for a while, with the Bank of America CEO continually insisting he doesn’t remember ever talking about Countrywide at these meetings, that you’d have to “get the minutes.” Incredulous, Calamari, a little sarcastically, finally asks Moynihan if he would say he has a good memory.

“I would – I could remember things, yes,” Moynihan deadpans. “I have a good memory.”

Calamari presses on, eventually asking him about the state of Countrywide when Moynihan became the CEO, leading to the following remarkable exchange, in which the CEO of one of the biggest companies in the world claims not to know anything about the most significant acquisition in the bank’s history (emphasis mine):

Q: By January 1st, 2010, when you became the CEO of Bank Of America, CFC – and  I’m using the initials CFC, Countrywide Financial Corporation – itself was no longer engaged in any revenue-producing activities; is that right?

Moynihan: I wouldn’t be the best person to ask about that because I don’t know.

There are no sound effects in the transcript, but you can almost hear an audible gasp at this response. Calamari presses Moynihan on his answer.

“Sir,” he says, “you were CEO of Bank Of America in January, 2010, but you don’t know what Countrywide Financial Corporation was doing at that time?”

In an impressive display of balls, Moynihan essentially replies that Bank of America is a big company, and it’s unrealistic to ask the CEO to know about all of its parts, even the ones that are multi-billion-dollar suckholes about which the firm has been engaged in nearly constant litigation from the moment it acquired the company.

“We have several thousand legal entities,” is how Moynihan puts it. “Exactly what subsidiary took place [sic] is not what you do as the CEO. That is [sic] other people’s jobs to make sure.”

The exasperated MBIA lawyer tries again: If it’s true that Moynihan somehow managed to not know anything about the bank’s most important and most problematic subsidiary when he became CEO, well, did he ever make an effort to correct that ignorance?  ”Do you ever come to learn what CFC was doing?” is how the question is posed.

“I’m not sure that I recall exactly what CFC was doing versus other parts,” Moynihan sagely concludes.

The deposition rolls on like this for 223 agonizing pages. The entire time, the Bank of America CEO presents himself as a Being There-esque cipher who was placed in charge of a Too-Big-To-Fail global banking giant by some kind of historical accident beyond his control, and appears to know little to nothing at all about the business he is running.

In the end, Moynihan even doubles back on his “we’ll pay for the things Countrywide did” quote. Asked if he said that to a Bloomberg reporter, Moynihan says he doesn’t remember that either, though he guesses the reporter got it right.

Well, he’s asked, assuming he did say it, does the quote accurately reflect Moynihan’s opinion?

“It is what it is,” Moynihan says philosophically.

There’s nothing surprising about any of this – it’s natural that a Bank of America executive would do everything he could to deny responsibility for Countrywide’s messes. But that doesn’t mean it’s not funny. By about the thirtieth “I don’t recall,” I was laughing out loud.

It’s also more than a little infuriating. In the pre-crash years, Countrywide was the biggest, loudest, most obvious fraud in a marketplace full of them …

One of the biggest indictments you can level against U.S. news media is that U.S. financiers were engaging in this level of world-historical theft, fraud and conspiracy right out in the open for a decade and more, and yet no one of consequence has done any hard time for it.

If we are to take Moynihan at his word, the only way you could have been more delusional and out of touch than he was to have believed on election night that Mitt Romney was going to win big. But as the deposition makes clear, taking Brian Moynihan at his word  would make a box of rocks look like a Davidson valedictorian.

I’ve looked at clods from both sides, now …

Pretty much every single professional journalist in Washington, and a lot of regular Americans, think there are virtues to be had in balance, moderation and centrism. Perhaps as an extension of that belief — for it certainly is not on the basis of even moderately complicated economics, or, for that matter, mathematics — they believe that both the rich and the poor must give something up to address the nation’s budget issues.

(I refuse to call them budget problems, let alone crises; they are issues in the way that we say that sociopaths have issues in that they are the perfectly predictable, and pretty well predicted, results of predictably sociopathic decisions made by known sociopaths.)

So a lot of people who either ought to know better, or who do know better but stand to profit from pretending otherwise, are out there arguing that we need to screw the rich a tiny bit and the middle class and poor a lot to “fix” the deficit (which is fixing itself pretty nicely at the moment, plunging dramatically as a percentage of GDP, but never mind that) and that if both sides are angry, as they are about the nonexistent Simpson-Bowles “report,”  then we must be doing the right thing. The problem, of course, is that not all anger is justified, valid, moral or even sane, as Charlie Pierce reminds us:

Can we please have an honest assessment of credibility here? If billionaires are angry because they might have to chip in some boutonniere money on April 15, and a middle-class family is angry because their 82-year old grandmother with Alzheimer’s is lying in her own filth in a substandard nursing home because of Medicare “reforms,” are we honestly saying that the anger of both sides is equally justified? Has anyone even asked that question?

To the best of my knowledge, no one in the DC media has asked this question, and my friend Doug Clark at the N&R, who’s usually much more sensible, doesn’t seem to be concerned with it, and, hey, I’ve got a blog, so I thought I’d raise it here.

Also, if you don’t want to repeat after me, kids, repeat after economist Dean Baker: The deficit problem is not an entitlements problem.

Listen to the man before you go giving away your — and my — Social Security and Medicare:

The gang for gutting Social Security and Medicare (aka “The Campaign to Fix the Debt”) are running in high gear. During the long election campaign they gathered dollars, corporate CEOs and washed up politicians for a full-fledged push in the final months of the year. They are hoping that the hype around the budget standoff (aka “fiscal cliff”) can be used for a grand bargain that eviscerates the country’s two most important social programs, Social Security and Medicare.

They made a point of keeping this plan out of election year politics because they know it is a huge loser with the electorate. People across the political and ideological spectrums strongly support these programs and are opposed to cuts. Politicians who advocated cuts would have been likely losers on Election Day. But now that the voters are out of the way, the Wall Street gang and the CEOs see their opportunity.

It is especially important that they act now, because one of the pillars of their deficit horror story could be collapsing. Due to a sharp slowing in the rise of health care costs over the last four years, the assumption that exploding health care costs would lead to unfathomable deficits may no longer be plausible even to people in high level policy positions.

As we all know, the large budget deficits of the last four years are entirely due to the economic downturn caused by the collapse of the housing bubble. The budget deficit was slightly over 1.0 percent of GDP in 2007 and the Congressional Budget Office (CBO) projections showed it remaining low for the near-term future. The origin of the large deficits of the last few years is not a debatable point among serious people, even though talk of “trillion dollar deficits, with a ‘t’” is very good for scaring the children.

However, the big stick for the deficit hawks was their story of huge deficits in the longer term. They attributed these to the rising cost of “entitlements,” which are known to the rest of us as Social Security, Medicare, and Medicaid.

While they like to push the notion that the aging of the population threatened to impose an unbearable burden on future generations, the reality is that most of the horror story of huge deficits was driven by projections of exploding private sector health care costs. Since Medicare and Medicaid mostly pay for private sector health care, an explosion in private sector health care costs would eventually make these programs unaffordable.

As some of us have long pointedout, there are serious grounds for questioning the plausibility of projections that the health care sector would rise to 30 or 40 percent of GDP over the rest of the century. Recently a paper from the Federal Reserve Boarddocumented this argument in considerable detail.

Even more important than the professional argument over health care cost projections is the recent trend in health care costs. While the CBO projections assume that age-adjusted health care costs rise considerably more rapidly than per capita income, in the last four years they have been roughly keeping pace with per capita income.

In fact, in the last year nominal spending on health care services, the sector that comprises almost two-thirds of health care costs, rose by just 1.7 percent. This is far below the rate of nominal GDP growth over this period, which was more than 4.0 percent. While at least some of this slowing in health care costs is undoubtedly due to the downturn, it is hard to believe that it is not at least partially attributable to a slower underlying rate of health care cost growth.

CBO and other budget forecasters can ignore economic reality for a period of time (they ignored the housing bubble until after its collapse wrecked the economy), but if it continues, at some point they will have to incorporate the trend of slower health care cost growth into their projections. When this happens, the really scary long-term deficit numbers will disappear.

A projection that assumes that health care costs will only rise as a result of the aging of the population, and otherwise move in step with per capita income, will lop tens of trillions of dollars off the most commonly cited long-term deficit projections. It would cost some deficit hawks, like National Public Radio, more than $100 trillion of their long-term deficit story. This would be a real disaster for the deficit hawk industry.

This is why the Campaign to Fix the Debt and the rest of the deficit hawk industry will be operating at full speed at least until a budget deal is reached over the current impasse. If CBO adjusts its long-term health care cost projections downward then their whole rationale for gutting Social Security and Medicare will disappear. Now that is really a crisis.

And in light of today’s horrid front-page News & Record article on the so-called fiscal cliff, here’s a question for Greensboro peeps: Would it really be too much trouble to get Jeff Gauger and his crew at the N&R to introduce some fact-based economic coverage? The voters last week seemed to indicate a taste for that kind of thing.

Repeat after me, kids: There. Is. No. Fiscal. Cliff.

The Washington Post continues to lie, and economist Dean Baker, bless him, continues to call them out on it. Logic having failed, he now turns to mockery:

The Washington Post is throwing all journalistic norms aside in its drive to cut Social Security and Medicare. It continues to hype the budget standoff as an ominous “fiscal cliff” and tells readers on the front page of its web site that it could provide a “magic moment” in which Social Security and Medicare can be cut. The piece begins by telling readers:

“Two years ago this month, the leaders of a presidential commission rolled out a startling plan to dig the nation out of debt. After decades of stagnating incomes, they said, Washington must tell people to work longer, pay higher taxes and expect less in retirement.”

Okay I tricked you, this is the Washington Post which doesn’t acknowledge economic realities like stagnating income. The piece actually began:

“Two years ago this month, the leaders of a presidential commission rolled out a startling plan to dig the nation out of debt. After decades of profligacy, they said, Washington must tell people to work longer, pay higher taxes and expect less in retirement (emphasis added).”

This departure from reality gives you the gist of the story. The piece continues:

“Lawmakers recoiled from the blunt prescriptions of Democrat Erskine Bowles and Republican Alan K. Simpson. But their plan has since been heralded by both parties as a model of clear-eyed sacrifice, and policymakers say the moment has come to live up to its promise.”

Well, yes people have praised their plan. They have also ridiculed it. For example it proposes immediate cuts in Social Security benefits that would be a larger share of the income of the typical beneficiary than President Obama’s proposed tax increases on the top 2 percent would be for most of the affected taxpayers. It also proposes increasing the age for Medicare eligibility, even though this would add tens of billions to the country’s health care costs over the next decade. And, it proposed a minimum Social Security benefit for low wage earners that few low wage earners would actually qualify for due to the number of working years required to qualify.

You  know what the worst thing will be to happen immediately if we don’t have a new deal by Jan. 1? Very rich people will start having to pay a little more in income taxes. Quelle horror.

Also, everyone just needs to shut up about Erskine Bowles being some kind of selfless patriot and/or competent leader. As White House chief of staff, he made Bill Clinton’s affair with Monica Lewinsky possible (not that Clinton wasn’t a Grade A horndog, but you don’t give people like that lots of free time if you expect them to lead the nation without embarrassment). The guy’s an investment banker. He personally will profit a great deal from any kind of austerity deal, as will the investment bank on whose board he sits. Also? Obama is expected to get 60 votes in the Senate to get anything done, a situation the Framers never intended, and Bowles couldn’t even get 14 votes for his own plan from a committee that was named after him. I think that tells you just about all you need to know.

Summing up

Outsourced to Pierce:

It is vitally important that the Republican party be kept away from as much power as possible until the party regains its senses again. It is not just important to the advance of progressive goals, though it is. It is not just important to maintain the modicum of social justice that it has taken eighty years to build into the institutions of our government, though it is. It is important, too, that that you vote for one of these men based on whom else, exactly, he owes. Who is it that’s going to come with the fiddler to collect when you get what you’ve bargained for?

Barack Obama owes more than I’d like him to owe to the Wall Street crowd. He probably at this point owes a little more than I’d like him to owe to the military. The rest he owes to the millions of people who elected him in 2008 — especially to those people whose enthusiasm I neither shared nor really understood — and he will owe them even more if they come out and pull his chestnuts out of the fire for him this time around. He may sell them out — and, yes, I understand if you wanted to add “again” to that statement — but they are not likely to revenge themselves against the country if he does and, even if they decided to, they don’t have the power to do much but yell at the right buildings.

On the other hand, Willard Romney owes even more to the Wall Street crowd, and he owes even more to the military, but he also owes everything he is politically to the snake-handlers and the Bible-bangers, to the Creationist morons and to the people who stalk doctors and glue their heads to the clinic doors, to the reckless plutocrats and to the vote-suppressors, to the Randian fantasts and libertarian fakers, to the closeted and not-so-closeted racists who have been so empowered by the party that has given them a home, to the enemies of science and to the enemies of reason, to the devil’s bargain of obvious tactical deceit and to the devil’s honoraria of dark, anonymous money, and, ultimately, to those shadowy places in himself wherein Romney sold out who he might actually be to his overweening ambition. It is a fearsome bill to come due for any man, let alone one as mendaciously malleable as the Republican nominee. Obama owes the disgruntled. Romney owes the crazy. And that makes all the difference.

I expect Pat McCrory to be elected governor tomorrow and for his coattails to bring this state’s electoral votes back into the red column. And I expect McCrory to spend the next four years signing every damn-fool piece of lunacy the teabaggers in the General Assembly send his way, because that’s the GOP base in this state now, and McCrory has ambitions. And the damage from this dynamic will be significant. Make no mistake. If we’re not careful, by 2016 we’ll be well on the way to making Mississippi look good.

But, if honest ballots are counted honestly, Barack Obama will win re-election with a minimum of 300 electoral votes. And given issues ranging from Iran to global warming, that might be the difference between life and death, both here and abroad, to millions of people. Me? I’ve already voted. I am disgruntled, very much so. But I am not crazy.

A final word to my friends in deep-blue states who aren’t totally happy with Obama’s record and are thinking about casting a protest vote for Jill Stein or Roger Rabbit or whomever: I hear you. But know this: Those crazy folks I mentioned above intend, if Obama wins the electoral vote but not the popular vote, to claim that Obama is not a “legitimate” president. They will go through every hare-brained legal exercise they can find to try to prevent him from returning to the White House, and there are at least four Supreme Court justices who will nod and smile at any damn-fool argument these crazy people try to make. Yes, yes, George Bush lost the popular vote in 2000.  But expecting logical consistency from crazy people, although not necessarily crazy itself, is a fool’s errand. Let’s just erase this contingency by giving Obama a popular-vote margin not even well-organized, well-funded crazy people can steal.

“I’m a great person, but don’t look in my basement, ‘kay?”*

Rajat Gupta, a former director of Goldman Sachs, is getting two years in prison and being fined $5 million for his role in providing insider information to  Galleon Group hedge-fund manager Raj Rajaratnam.

The max he was looking at was 25 years, but the max generally isn’t a real number. The government was recommending 10 years, which sounds about right; Rajaratnam got 11. But Gupta got off with two after lots of people testified about what a nice guy he was and his daughter testified about how she’d been harassed at school after his arrest. I’m sorry for his daughter, but that has no bearing on Daddy’s sentence. The guy was walking directly out of Goldman Sachs board meetings to telephone Rajaratnam; that’s pretty brazen.

Unlike homicide, a crime often committed in the heat of the moment and with a less than clear head, it takes a fair bit of premeditation and deliberation to engage profitably in insider trading. That’s exactly the kind of crime that stiffer sentences really will deter. Frog marching the banksters around in orange jumpsuits on live TV probably would also help, I think.

But getting sentenced for insider trading is so 1980s. How ’bout we start sentencing people for blowing up the economy? We wouldn’t want Gupta to be lonely in prison, missing all his friends at Goldman Sachs, would we?

*hed h/t commenter rgqueen

Our terrible, horrible, no-good, very-bad news media and the deficit; or, Don’t point that gun unless …

Economist Dean Baker:

In the middle of a steep recession, any measure that reduces the deficit will cost jobs. That is because it will reduce demand. If anyone wants to see a lower deficit in 2013 (certainly the Post does), then they want to throw people out of work.

This is sort of like pulling the trigger on a gun pointed at someone’s head. Presumably this is not done unless the desire is to see the person dead.

 

American suffering as morality play for our so-called journalists

Sir Charles on the great American sport of granny-starving, as applauded by The Village:

Someday someone is going to do a study on the psychological attitudes of the worthless media elite of our time and their obsession with making life more miserable for large swaths of their fellow Americans. The degree to which Saletan, Dancin’ Dave Gregory, David Brooks, and virtually the entirety of Fred Hiatt’s funny pages (save Eugene Robinson, Harold Meyerson, and E.J. Dionne), get tumescent over granny having to move in with the kids because she can’t afford to live on her own is really like nothing I’ve ever seen. It’s gratuitous cruelty at the hands of people who have far more than they deserve and confuse this status with wisdom

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Child abuse

Economist Dean Baker:

Yes, on this great day when we hear the unemployment rate is 8.3 percent, NYT columnist Bill Keller is still pressing on the need to curb Social Security and Medicare spending and calling on his fellow baby boomers to rise to the occasion. He has even brought in Jim Kessler, the senior vice-president for policy at Third Way, to help him make the case.

I’m sure that Keller and Kessler would consider my mention of the 8.3 percent unemployment rate to be rude, after all what does that have to do with the need to cut Social Security and Medicare? There is a simple answer to that. The 8.3 percent unemployment rate should be seen as comparable to a school fire where the children are still inside the building. Tens of millions of people are seeing their lives ruined.

This is not a short-term story. Many of the families that will break up under the stress of high unemployment or the loss of their home will not get back together when the unemployment rate falls back to a more normal level. Similarly, the kids who have their school lives disrupted because their parents lose their homes or must move in search of jobs and/or family break up will not have the damage repaired later. This is why 8.3 percent unemployment should be problems #1, #2, and #3.

And yes, we do know how to fix this. Spending money puts people to work. Contrary to a bizare cult in policy circles, it does not matter whether money comes from the private sector or public sector –dollars will get people to work. And the people who get those dollars will spend them and put other people to work. If Keller and Kessler want to be responsible baby boomers they will do everything in their power to try to get us back to full employment quickly so that so many children do not have to grow up in families that are troubled by unemployment. The next generation will thank them for their efforts, I assure them.

UPDATE: Link added. H/t to Beau for alerting me to the omission.

UPDATE: Greensboro folks, this Keller piece appears on the front of today’s Ideas section in the News & Record.

Sorry, but, yes, the 2008 bank bailouts really were as much of a reaming of the American taxpayer as we thought at the time

Another crappy “both-sides-do-it” column: Betsey Stevenson and Justin Wolfers write at Bloomberg that our current political debate on the economy is a “sham” because leading economists unanimously agree that  the bailouts helped the unemployment situation. But economist Dean Baker provides the missing context: While that claim might be technically true, the bailouts could have been structured far more constructively than they were, both to address then-current problems and to help prevent the recurrence of similar problems:

The Wall Street banks were on life support in the fall of 2008. Without trillions of dollars of government loans and guarantees (much more came from the Fed than the TARP money that went through the Treasury), they would be dead, deceased, pushing up daisies, out of business. The boys and girls getting those huge paychecks on Wall Street were at Uncle Sam’s doorstep pleading for help. There was no one else to save them from destitution.

In this context there were three main choices. One was to drag out Mitt Romney and give them a lecture about the free market and tell them the government is not about giving people stuff. In this case the banks go under leading to a full-fledged financial melt-down. In this story, the economy certainly takes a bigger immediate hit, but the advantage is that we have a Wall Street free world. Goldman Sachs, Citigroup, Morgan Stanley, J.P. Morgan and the rest would be history. They are in receivership, waiting to broken up and sold off. This parasitic sector that has led to so much waste, corruption and inequality is no longer a drag on the economy. Consider this short-term pain for long-term gain. (Just kidding about the Romney part, he supported the bailout.)

The second choice is hand over the money, which is the route we took. Oh yeah, Congress did put conditions on the money, but we know that was just for show. One of the most disgusting things I’ve seen in my years in Washington were the excellent stories on how executive compensation was treated in the TARP that the Washington Post and Wall Street Journal ran after the TARP passed.

Both articles featured comments from compensation expert Graeff Crystal who explained that the government could have changed compensation patterns on Wall Street forever (the Wall Street boys needed the money), but Congress instead took a pass. It would have been great if Crystal’s views were part of the public debate before the bill was passed.

This brings up option number 3, hand the money over but with real conditions. Congress could have said that banks that got TARP money, funds through the Fed’s special lending facilities, or benefited from the various Treasury and FDIC insurance commitments had to:

a) strictly limit all pay in all forms for the next five years;

b) set up a clear, legally enforceable plan for writing down underwater mortgages on their books;

c) agree to a breakup schedule that would get them below “too big to fail” size by a set date.

To my mind, option #3 was clearly the best route since it would fix the financial industry and avoid the crash that would result from going cold turkey in option #1. But let’s say that the choice is just the full crash in option #1 or the handout in option #2. In order to seriously decide between these we need some basis for assessing the size of the downturn. Saying that the short-term impact would have been worse in option #2 doesn’t tell us anything about the proper policy choice. We pay short-term costs for long-term benefits all the time. We need the terms of the trade-off.

In ths respect, the commonly claimed “second Great Depression”scenario is, to use a technical economic term, “crap.”  The first Great Depression, by which I mean a decade of double-digit unemployment was not locked in stone by the mistakes made at its onset. There was nothing that would have prevented the government from having the sort of massive stimulus spending that eventually got us back to full employment (a.k.a. World War II) in 1931 instead of 1941 and without the war. The fact that we remained in a depression for more than a decade was due to inadequate policy response.

In this respect, to claim that if we let the banks collapse we would have been destined to suffer a decade of double digit unemployment is absurd. That would only be the result if we continued to have bad policy, not just in 2008, but in 2010, in 2012, right through to 2018.

The serious question is how bad could we reasonably expect the downturn to have been if we had gone the cold turkey route. The place to look for insight on this question is Argentina, which went the financial collapse route in December of 2001. This was the real deal. Banks shut, no access to ATMs, no one knowing when they could get their money out of their bank, if they ever could.

This collapse led to a plunge in GDP for three months, followed by three months in which the economy stabilized and then six years of robust growth. It took the country a year and a half to make up the output lost following the crisis.

While there is no guarantee that the Bernanke-Geithner team would be as competent as Argentina’s crew [indeed, subsequent events have shown that they are not -- Lex], if we assume for the moment they are, then the relevant question would be if it is worth this sort of downturn to clean up the financial sector once and for all. I’m inclined to say yes, but I certainly could understand that others may view the situation differently.

Anyhow, this is the debate that we should have had the time and at least be acknowledging in retrospect.

We had the bastards down in the fall of 2008, and we didn’t hit them with the chair. A century from now that failure will be considered the key turning point in the transition of the U.S. from a democratic republic to a full-on oligarchy.

Rigged game, part MMXII; or, Too much is never enough

If you want proof that America’s economics and finances are in the hands of people who couldn’t give less of a shit about the common good, look no further than Caterpillar, the maker of bulldozers and other heavy equipment.

The company made $4.9 billion in profits last year — about $39,000 per employee — and projects an even better 2012.  So how is it rewarding its workers? By insisting that they agree to a six-year wage freeze and a freeze on pensions as well, and demanding that they contribute up to $1,900 per year more for health care than they already are. This move comes, the Times reports, as the company netted almost $1.6 billion in the first quarter of this year and “has significantly raised its executives’ compensation because of its strong profits.”

The workers said, in effect, “[Bleep] this noise,” and went on strike. Good for them.

The company argues that its wages make it less competitive in the marketplace, but the boost in compensation for its executives gives that game away. Its top six executives alone got cash and stock worth almost $40 million last year. Sure, you can make a case that Caterpillar is a well-managed company and they should be properly compensated. But the U.S. wage market has been artificially distorted in the past few decades to overcompensate a few at the top for outcomes that, when favorable, are as much the work of their much-lower-paid minions as of themselves. There’s a strong argument that reversing that trend would benefit the economy as a whole, which, other than plain selfishness, might well be part of the reason why these sociopaths oppose it.

Rose Bain, a striker, grows impatient with such arguments [that Caterpillar's demands are fair]. Earning $15 an hour after two years, she said she could not afford a six-year freeze and did not trust Caterpillar to follow through with [a] hinted raise for lower-paid workers.

“We’re the people who busted our butts to help them make record profits,” she said. “We shouldn’t be treated like this.”

Exactly. And the fact that we’re even having to have this conversation shows how incredibly out of touch with reality our Galtian overlords have gotten. Worse, some of the same kinds of people who run Caterpillar want us to run the country the same way. I think Charlie Pierce speaks for anyone who has a lick of sense:

Jesus God, is there anyone — A-N-Y-O-N-E — out there beyond the Beltway who still believes that the CEO’s of American corporations have any inclination to act in the general national interest? Is there anyone — A-N-Y-O-N-E — out there beyond the Beltway who’d still trust [J.P. Morgan Chase CEO] Jamie Dimon to park his car? … I never thought I’d see the living definition of bleeding a country with leeches, but this comes awfully close.

UPDATE: Missing words restored 7/25.

We already know what Mitt Romney’s problems are. Now let’s talk about Bain Capital’s.

It is a truism that the duty of a corporation’s directors is to maximize shareholder value. However, different directors and corporations and, yes, takeover artists and “turnaround specialists” define that duty in different ways. To offer an example that is simple bordering on crude, does that mean maximize next quarter’s dividend, or does that mean maximize earnings over the long haul while remaining financially healthy and competitive? Because, although they need not, these two definitions often clash.

And because they do, “turnaround specialist” can be someone who actually does return a troubled company to financial health — or someone who wrecks a company’s long-term stability for the sake of short-term profit, which may or may not actually go to shareholders, or to all shareholders in proportion to their holdings.

Guest poster Bernard Finel at Balloon Juice explains:

“Troubled” companies have a particular meaning on Wall Street. Sure, sometimes they refer to companies that are just muddled, have over-expanded, and are badly managed. But more often, what they are talking about is companies that do not seem to providing a large enough return to shareholders—a stagnating stock price in particular. But that does not mean a company is “troubled.” It can be quite profitable, have productive and loyal employees, have satisfied customers, and cash on hand.

What players like Bain do is enforce a Wall Street preference. There is a bias against companies that seek a “quiet life.” They are shunned by institutional investors, which depresses stock prices and makes these companies “troubled” in the first place. It isn’t that they are not profitable, but rather than institutional investors don’t like them, and as a result they trade at dramatically lower P/E ratios. Indeed, it isn’t even clear that takeover targets do have weaker stock performance if you lookat total returns, including dividends.

Once a company goes public, it is essentially subject to “disciplinary” takeovers if it fails to act in accordance with financial sector preferences. This is often phrased as “poorly performing managers,” but what does that really mean? That is really just about enforcing a certain conventional wisdom about what a company ought to do. But these preferences are socially problematic. Consider some of the things that seem to contribute to being a takeover target: slow growth, stable revenues, cash on hand rather than debt, generous employee compensation, conservatively-funded pension or insurance plans. (Again caveats abound. There is no simply model of predicting takeover targets.)

So, in a sense, Bain, and other buyout specialists, serve to enforce a particular type of corporate behavior that focus on expansion at the expense of predictability, risk acceptance in terms of contractual obligations to employees, and a ruthless focus on cost controls at the expense of employee loyalty and stability.

As a practical matter, it is not clear that this sort of approach is conducive to more rapid economic growth. Certainly the rise of this consensus and expansion of “disciplinary” takeovers since the 1980s has not resulted in any noticeable improvement in U.S. macroeconomic performance. And furthermore, the evidence on whether takeover targets overperform or underperform after being bought is mixed.

But what has happened is that as firms accept these practices, they become more dependent on the financial sector. They borrow more, become more active in raising money through equity sales, they run leaner by hedging through derivatives, and so on. In each case, they pay a cut to financial firms. The result has been that the financial sector’s share of corporate profits has risen dramaticallysince the 1980s.

Some of these companies will now be more successful, but many that move toward debt-fueled expansion will crash and burn. The financial sector wins either way. But it isn’t clear to me that corporate America in general win, and certainly workers whose pensions gets looted, and unions busted, and ride the boom and bust cycles of overtime and layoff do quite poorly.

I’m sure this is something of a problem with privately held companies as well. But the publicly traded ones are out there where everyone can see them. The example with which I’m most familiar is the newspaper industry. During the latter half of the 20th century, most privately held U.S. papers were bought by publicly traded chains (e.g., Gannett, Knight Ridder, Media General, Tribune, etc.). The cash from selling stock was useful for expansion, but it was a devil’s bargain: With it came short-term bottom line pressure. Perhaps the best example was Eugene Roberts, who took over as executive editor of Knight Ridder’s  money-losing Philadelphia Inquirer in 1972 and led it to both profitability and excellence in local, national and global journalism, including 17 Pulitzer Prizes in 18 years. Roberts was forced out in 1990 for  resisting budget cuts. At the time, the paper’s profit margin was around 8 percent — low for newspapers in that local-monopoly, pre-Internet era but a margin a lot of businesses would kill for, then and now.

I am not going to argue, particularly in light of Knight Ridder’s ultimate fate, that the Inquirer would be healthier today with Roberts at the helm. But I will argue that the biggest flaw in this scenario is not Roberts or the Inquirer or Knight Ridder management or even the whole newspaper industry’s lethal slowness to understand what the Internet was going to do to it. No, the biggest flaw, one merely illustrated by Romney’s exploits at Bain Capital, is that our current ethos of governance for publicly traded companies in any industry doesn’t just make it somewhere between difficult and impossible for even creative companies to survive long-term (which the odds are against in any business regardless of governance). In fact, that ethos, in many cases, is functionally indistinguishable from putting a loaded gun to your head and pulling the trigger. People call it “vulture capitalism,” but that’s an insult to vultures, which typically neither attack healthy animals nor redefine “healthy” to justify their predatory scavenging.

UPDATE: Just today, economist Dean Baker makes a related and very important point: Running a private-equity firm is much more about profiting from tax dodges than it is about making companies more efficient.

Memo to Simpson-Bowles fanboys/-girls, the New America Foundation, Paul Ryan groupies and everybody else who thinks the deficit is our biggest current problem:

You cannot slash taxes AND slash spending AND still reduce the deficit. It’s mathematically impossible. You can no more reduce the deficit this way than you can walk to the moon or skin-dive the Marianas Trench.

And if you try it, we’ll be in another recession in a heartbeat. Hell, with three straight months of falling consumer spending, we might be heading into another one even if you don’t.

This really is the era of lowered expectations. I used to pray for deliverance from extremist ideologues. Now I just pray for deliverance from people who can’t count.

Our current national politics in a nutshell

I’ve got tons of homework to do  in a houseful of boxes, so take it away, Charlie Pierce:

It was about midway through the completely predictable impeachment of Bill Clinton when I decided that the most fundamentally obsolete question that could be asked concerning anything in American politics any more was, “They really couldn’t do that, could they?” This has held me in good stead ever since, especially while observing the behavior of conservative lawmakers. I watched the entire country turn against them in public revulsion during the prolonged Terri Schiavo fiasco and knew good and well that they were going to chase that “issue” right over the cliff. So, as this whole pursuit of Eric Holder has gathered speed, I had no doubt in my mind at all that, sooner or later, he was going to be the first cabinet official ever held in contempt of Congress, and that it didn’t matter that the cheapjack grifter Darrell Issa already has said he doesn’t think that any crimes were committed, or that the White House was in any way involved, or that Fortune magazine pretty much blew up the raison d’etre for the whole business over the weekend. I just assumed, based on long experience, that, once they opened the ball on Eric Holder, they weren’t going to stop until they got at least a piece of what they wanted. This isn’t because they’re reckless partisans. It’s because they’re f—ing vandals who have the votes. …

Out in front of the capitol, assistant Democratic leader Jim Clyburn had just finished saying, “This is not about oversight. This is about overkill. This is about this committee honoring its precedent of what happens no matter which Republican is chairing it. This is Dan Burton, who was going after Ron Brown because of stuff he made up. Now it’s Chairman Issa, going after Attorney General Holder over stuff he made up.”

You will note that Clyburn didn’t cite Bill Clinton, Burton’s major target back in the day, but the late Ron Brown, another African-American cabinet member. Clyburn’s meaning could not have been clearer.

Because Barack Obama got elected president, see, so we live in a postracial society and nothing is about race anymore.

Here at this end of the I-85/95 corridor, I had hoped Pat McCrory might be different. But his determination to continue working for a politically connected law firm — not as a lawyer, mind — for what seems like an awful lot of money for a nonlawyer job and without telling us what he’s doing for that money, stinks to high heaven. And the more I hear of him, the less likely I think he is to even try to stand up to the sociopaths in the legislature who couldn’t be bothered to compensate the people we illegally castrated not so horribly long ago (and that, of course, was not about race, either), let alone push policies that really will enhance the general welfare. Even if he isn’t a fundamentalist whackjob — and I realize this may come as a shock to some folks from outside North Carolina, but not all Republicans here are — he probably is going to support the decades-old campaign by the GOP to transfer and concentrate wealth upward. That’s brought us double-digit unemployment nationally, even more so here in the Old North State, and that shit has to stop.

Bill Donohue of the Catholic League (which is just Bill Donohue and his computer) is loathsome, cont.

Now he’s threatening rabbis:

Catholic League president Bill Donohue, a vocal conservative voice who recently warred with The Daily Show over a “vagina manger,” has infuriated prominent Jewish leaders with a private email last week to Philadelphia Rabbi Arthur Waskow.

Waskow, a progressive rabbi involved in the Jewish Renewal movement, had criticized the Vatican and the U.S. Conference of Catholic Bishops in a Huffington Post op-ed for “attacking the religious freedom of millions of American women and the religious freedom of American nuns” over contraception.

Donohue responded with a note to Waskow that launched an email exchange that ended with a warning, forwarded to BuzzFeed by a source close to the rabbi, that “Jews had better not make enemies of their Catholic friends since they have so few of them” (Donohue writes that this is a saying of Ed Koch, the former mayor of New York). Donohue also includes a postscript saying, “I do not have a long nose.”

Donahue also raised a recent child abuse scandal in Orthodox Jewish communities.

“You need to do something about this epidemic right now,” he told Waskow, who is not Orthodox, suggesting that Jews follow the Catholic Church’s reforms in dealing with clerical abuse.

The balls on this guy, not to mention the ignorance. He has been a co-conspirator in a decades-long international chilid-rape and obstruction-of-justice scheme, and he presumes to lecture a Reform rabbi about a scandal in the Orthodox community.

Oh, and that “saying of Ed Koch”? Um, not so much:

Koch, the former mayor of New York, said that he never said the quote Donohue attributes to him.

“My comments have always been about fostering good feelings between Jews and Catholics toward mutual understanding of our shared interests,” Koch said in a statement. “However, I certainly do not believe that Jews, or Catholics, should be threatened for making critical remarks, nor should my name be used when doing so. While I do have a high regard for Bill, his references to me and my remarks were inappropriate and different in substance and tone than what I said on an earlier occasion. My remarks did not and do not refer to the Rabbi’s comments.”

(Which just goes to show that Ed Koch is an idiot because no one with an IQ higher than that of a toaster has a high regard for Bill. But I digress.)

I got Bill Donohue’s news releases pretty much weekly when I covered religion back in the mid-1990s. To judge from them as well as this latest incident, he is insane and an utter sociopath. And that’s a bit of a problem when, as New York Times columnist Bill Keller writes:

when he took charge of the Catholic League in 1993, Donohue could be dismissed as a conservative blowhard, one of those laymen who was, ahem, more Catholic than the pope. [His divorce notwithstanding -- Lex.]  But the official church has moved far enough to the right that Donohue now speaks for its mainstream.

Bill Keller has been wrong about many things over the years. But if he’s right about this, then the Roman Catholic Church’s leadership has become an undisputed threat not only to Reform Jews but to all Americans — and needs to be treated accordingly. The Clan of the Red Beanie, as Charlie Pierce frequently calls them, doesn’t seem to understand that we’ve already had this argument, in 1787, and their side lost. The fact that they continue to seek to impose on all Americans, not just their own congregants, public policies that would unquestionably increase total human suffering in this country significantly merely demonstrates the wisdom of the prevailing side all those years ago.

Dean Baker sums up our economic, political and journalistic problems in three short paragraphs

Baker:

Dana Milbank devoted his [Washington Post] column to the disenchantment of progressives with the current political situation. At one point he comments that “the still-lumbering economy has depressed President Obama’s supporters.”

While this is no doubt true, it is worth mentioning that just about all progressives said at the time that the stimulus would be inadequate to restore the economy to a healthy growth path. The collapse of the housing bubble destroyed close to $1.2 trillion in annual demand from construction and consumption. At its peak in 2009 and 2010 the stimulus only replaced about $300 billion in annual spending.

It is discouraging to see so many people suffering unnecessarily, but this outcome is exactly what our analysis predicted at the time. Unfortunately, having a track record of being right is not generally a factor in determining which views carry weight in Washington policy debates.

Somebody tell me again how the U.S. is a meritocracy. Or, as Driftglass famously observed:

We tried it your way. Again. It didn’t work. Again.

Everyone in America who has been screaming about OMGZ Teh_Deficit!!11! needs to sit down and shut up now.

As I and a lot of economists, some of them Nobel laureates, have been pointing out, America’s biggest problem NOW is not the deficit. It is lack of consumer demand, which is caused by joblessness. Deep, extended joblessness. In such an environment, cutting deficits, particularly by cutting spending, is only going to make matters worse.

Don’t believe me? Fine. Look at Britain, where they tried this asinine stunt and now find themselves not only still plagued with high unemployment but also officially in a double-dip recession.

(Helpful graphic from New York Times)

We. Need. Jobs. We. Need. Stimulus.

Our deficit problem is primarily a problem with our health-care system, the world’s most expensive and among its most wasteful, and the ’01 and ’03 Bush tax cuts. We fix those problems, we’ve got surpluses as far as the eye can see.

America: Land of opportunity?

Well, if, by “opportunity,” you mean, “scraping by and desperately hoping not to get sick”:

That’s right, folks: We’ve got a higher percentage of our work force working for less than two-thirds our median wage than any other industrialized democracy, and yet one major party insists that the answer to all our economic problems is more tax cuts for the wealthy and the other major party refuses to call this policy out for the batshit insanity that it is.

And you wonder why people are marching in the streets.

Why does income inequality matter?

Because it’s a matter of life and death:

If the recent trend of growing inequality in life expectancy continues through the next three decades,
then workers in the bottom half of the wage distribution can anticipate substantial reductions in the
expected length of retirement if the normal retirement age is increased in accordance with this
schedule. A male worker born in 1973 retiring at age 70 can expect to live 13.8 years in retirement, a full year less than the expected length of retirement for a worker born in 1912 …

Everyone’s entitled to his own opinion, but not his own math

Dean Baker eviscerates both James B. Stewart of The New York Times and Rep. Paul Ryan’s massive tax cuts for rich folks disguised as a federal budget:

What Stewart tells us is reasonable is that the budget calls for cuts in entitlements and tax reform. He then asks who could disagree with this.

One has to wonder whether Stewart has looked at the Ryan budget. First, on taxes the only specifics are cuts in the tax rates paid by rich people and corporations. None of the offsetting tax increases are specified.

If this sounds like a sensible opening gambit, let’s imagine the equivalent on the opposite side. Suppose that we proposed to increase Social Security benefits for the bottom two income quintiles of retirees. Suppose that we also proposed increased spending on infrastructure, research and development, and education.

Suppose the left-wing Ryan budget wrote down that these spending increases would be offset by unspecified reductions in government waste. We then told CBO to score it accordingly. Is this a good starting point for further discussion? …

Even more to the point: Is there anyone who has been paying attention for the past 20 years who believes that if some leftist proposed such a budget as Baker hypothesizes, the mainstream media (forget Fox) wouldn’t go utterly batshit calling out the many problems, miscalculations and flawed assumptions contained therein, including but not limited to some that were not flawed or miscalculated at all (Politifact and Factcheck, I’m looking at you)?

The Ryan budget is proving to be a wonderful Rorschach test. We have people who want to be part of the inside Washington conversation who praise the budget’s courage and integrity. Then we have people who believe in arithmetic who call it what it is: a piece of trash.

Why does this matter? Because people who ought to know better are running round calling Paul Ryan a serious thinker, when in fact he is either unable or unwilling to do fifth-grade math, and because there’s a nontrivial chance he will be Mitt Romney’s running mate.

The vampire squid and the hurricane

Matt Taibbi, who normally writes for Rolling Stone, daytripped over to the new fthebanks.org site today to announce:

There are two things every American needs to know about Bank of America.

The first is that it’s corrupt. This bank has systematically defrauded almost everyone with whom it has a significant business relationship, cheating investors, insurers, homeowners, shareholders, depositors, and the state. It is a giant, raging hurricane of theft and fraud, spinning its way through America and leaving a massive trail of wiped-out retirees and foreclosed-upon families in its wake.

The second is that all of us, as taxpayers, are keeping that hurricane raging. Bank of America is not just a private company that systematically steals from American citizens: it’s a de facto ward of the state that depends heavily upon public support to stay in business. In fact, without the continued generosity of us taxpayers, and the extraordinary indulgence of our regulators and elected officials, this company long ago would have been swallowed up by scandal, mismanagement, prosecution and litigation, and gone out of business. It would have been liquidated and its component parts sold off, perhaps into a series of smaller regional businesses that would have more respect for the law, and be more responsive to their customers.

But Bank of America hasn’t gone out of business, for the simple reason that our government has decided to make it the poster child for the “Too Big To Fail” concept. Because it is considered a “systemically important institution” whose collapse would have a major, Lehman-Brothers-style impact on the economy, two consecutive presidential administrations have taken extraordinary measures to keep Bank of America in business, despite a staggering recent legacy of corruption schemes, many of which were simply overlooked by regulators.

This is why the question of whether or not Bank of America should remain on public life support is so critical to all Americans, and not just those millions who have the misfortune to be customers of the bank, or own shares in the firm, or hold mortgages serviced by the company. This gigantic financial institution is the ultimate symbol of a new kind of corruption at the highest levels of American society: a tendency to marry the near-limitless power of the federal government with increasingly concentrated, increasingly unaccountable private financial interests.

The inevitable result of that new form of corruption is this bank, whose continued, state-supported existence should naturally outrage all Americans, be they conservative or progressive.

My position on this is to kill ‘em all and let God the FDIC sort ‘em out, because by any honest accounting standard not a damn one of our big banks, with the possible exception of JPM, is solvent and they’re all a clear and present danger to the country’s economic well-being. And BAC is a serial felon besides. Lord, if we’ve got to have a death penalty, let’s start using it on TBTF banks.

(h/t: Jill)

The crux of the biscuit …

… and the quote of the new day, from low-tech cyclist at Cogitamus:

You know, when liberating the free market makes “the United States” richer, it doesn’t do a damned bit of good for most of us unless some of that extra richness finds its way into our pockets.  But when the median household in 2010 is only 7% richer than the median household in 1973, despite the fact that we’re clearly way, WAY richer as a nation, that means our economy has failed in a very essential way.

Why, yes. Yes, it has.

Generosity

I’m a little late to this, but apparently GOP presidential candidate and pre-Vatican II Iron Catholic Rick Santorum said this:

I don’t believe in an America where the separation between church and state is absolute. The idea that the church can have no influence or no involvement in the operation of the state is absolutely antithetical to the objectives and visions of our country.

Whereupon which Erik Kain observes:

This is either straight-up opportunism dressed in religious drag or it’s one of the dumbest things to have fled a politician’s mouth in, well, days.

Aw, Erik, why such a pinched, crabbed, constricted outlook? Couldn’t it be both?

Anyone who argues differently is not trying to sell you something, he’s trying to steal what little you have left.

Facts and logic having failed to persuade anyone to do the right thing with respect to the economy, I decide instead to try a good rant, outsourced to Charlie Pierce:

Austerity has murdered any hope of recovery in the UK. It seems to have done the same thing in Italy. And, in Greece, the citizens of democracy’s birthplace seem to be taking offense at the notion that their first obligation is to punish themselves to make a lot of international bankers whole again, and to cement Angela Merkel’s place in European history, which will be further propped up in Germany by an economy that depends on strong labor unions, a thriving government safety net, and the world’s oldest universal health-care system, to which Germans are entitled, but to which Brits, Italians, Greeks and, if you believe David Gregory, Americans, are not. Make no mistake about it. “Austerity” is a theological construct. It is about punishing the alleged sins of sloth and gluttony. It is about purging through pain. It is about enshrining into law every misbegotten slander about the poor and struggling that’s been floating around the political dialogue for generations. And it doesn’t work.

The deficit is not our biggest immediate economic problem. Joblessness is. Questions? See post title.

 

This would leave a mark, if The Washington Post, the administration and Congress had any integrity

Economist Dean Baker on the Post’s reporting on unemployment:

The unemployment rate for the 30 percent of the workforce with college degrees is still more than twice its pre-recession level. If the Post had done its homework it would know that the problem is not the skill levels of unemployed workers, the problem is the skill level of people who make economic policy.

 

“Abracadabra,” or “Stick ‘em up”?

Like Keyser Soze in “The Usual Suspects,” some $1.2 billion in customers’ money has disappeared from MF Global Holdings Ltd., the trading firm run by former U.S. Sen. Jon Corzine, D-N.J.:

Federal officials looking for an estimated $1.2 billion missing from customers of MF Global Holdings Ltd. feel more and more that a lot of it may never be located, according to a report citing sources familiar with the probe.

What’s been learned so far suggests that a good deal of the money may have “vaporized” because of scrambling in trading in the week before MF Global filed for bankruptcy protection Oct. 31, the Wall Street Journal reported, citing “a person close to the investigation.”

Many now think specific MF Global employees used money from a customer account meant to be walled off and used it to cover collateral requirements or to unfreeze assets of banks and others as they became more worried about how exposed they were to MF Global, the Journal reported.

The probe also is looking at other possibilities that have taken on weight, including the chance that the firm lost a lot in investments that used customer money, according to the report.

At least, that’s what they’re saying in public. Duncan “Atrios” Black thinks the truth might be a little different:

No the money hasn’t disappeared, they’re just making clear that whoever took it is unlikely to relinquish it. Whoever took it is more important than the people it was taken from. … And a new standard will be established: the right people are free to steal $1.2 billion.

And who might those people be? Emptywheel hazards a guess:

I actually don’t think Federal Reserve Bank of NY Board Member Jamie Dimon got his hands on the almost $3 billion of Iraqi money deposited in the FBRNY that has vanished.

An audit by [Special Inspector General for Iraq Reconstruction Stuart] Bowen’s office published on Sunday investigated the roughly $3 billion the Iraqi government gave the Defense Department to pay bills for contracts the Coalition Provisional Authority awarded before it dissolved in 2004. Most of these funds were deposited into an account at the Federal Reserve Bank of New York.  Even though DOD was responsible for maintaining the proper documentation, it could only account for $1 billion of the money.

“It’s symptomatic of the poor record keeping that was rife throughout the early stages of the reconstruction effort,” Bowen, who has conducted three other major audits into the original pot of roughly $21 billion in Iraqi funds the U.S. managed in 2003 and 2004, said.

After all, that money dates to 2004 and Dimon’s service on the FBRNY Board didn’t begin until January 2007. (Though I will note that Jamie Dimon and Iraq’s money overlapped at the FBRNY for a year.) Moreover, it was DOD’s responsibility to keep track of the money, not the FBRNY or Jamie DImon.

Still, I can’t help but notice that the announcement that we’ve lost almost $3 billion of Iraqi’s money (on top of the more than $100 million in cash that managed to walk out of Saddam’s former palace) came within a day of the time some are declaring the missing MF Global $1.2 billion has “vaporized.”

[snip]

That money does seem to have been lost in the immediate vicinity of Dimon’s JP Morgan.

As the week progressed, MF Global executives came to believe that JPMorgan Chase & Co., one of MF Global’s primary bankers and a middleman moving that cash, was dragging its feet in forwarding the funds.

Corzine phoned Barry Zubrow, then JPMorgan’s chief risk officer, to question the slow payments. Corzine also called William Dudley, president of the Federal Reserve Bank of New York, to update him on MF Global’s status and told him that payments were slow to arrive from JPMorgan and others.

[snip]

JPMorgan was able to slow the delivery of funds, worsening MF Global’s distress. As a result, they note, hundreds of millions of dollars of MF Global money may be still stuck in accounts at JPMorgan.

So while I’m not suggesting Jamie Dimon bears any personal liability for these missing billions (or those of Lehman or Bear Stearns), I will note that Dimon seems to have the 21st Century equivalent of the Midas Touch: Rather than turning things into gold when he touches them, when billions get within reach of Jamie Dimon, they seem to vaporize.

For the record, I have no earthly idea where either the MF Global money or the Iraq money went, but I’m confident that it didn’t go wherever it went accidentally. Would it be irresponsible to speculate? It would be irresponsible not to.