You are hereEconomy
ARE OBAMA'S FINANCIAL PROPOSALS A ROAD TO REAL REFORM?
By Danny Schechter
Stabilizing A Flawed System is Not The Same As Restructuring Or Remaking It
A recent study cited by the Editor of the Financial Times argues that we are now in a Depression although no one wants to use the term or face the music.
By Dave Lindorff
President Barack Obama, referring to the violent attacks on protesters against the controversial election results in Iran’s just-completed presidential election, this week lectured Iran’s government, saying, “Peaceful dissent should never be subject to violence.”
Referring to the tens and hundreds of thousands of frustrated and angry Iranians who have taken to the streets accusing Iranian authorities of rigging the election in favor of incumbent President Mahmoud Ahmadinejad, Obama said that “the Iranian people and their voices should be heard and respected."
But there is a certain hypocrisy going on here.
J. Turley: Senatorial Privilege? Sen. Dick Durbin Cashed Out His Stocks and Shares After Meeting w/ Paulson & Bernake
Sen. Dick Durbin, the second most senior democrat in the Senate, cashed out his stock the day after meeting with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. Durbin took the money and invested much of the $115,000 in Warren Buffett’s Berkshire Hathaway Inc.
The transfers occurred on Sept. 19th. The prior day he met with Paulson and Bernanke on the banking crisis.
I have long advocated a change in the ethics rules to require blind trusts for all members of Congress. Currently, members can make killings on the market by using their access to policy changes and special tips. Read more.
$108 Billion for IMF Will Cost Much More than Budgeted
Washington, D.C.- According to the Office of the Majority Leader in the House of Representatives, on Thursday the U.S. Treasury Department, which seeks to persuade the U.S. Congress to approve a $108 billion line of credit for the International Monetary Fund (IMF), released talking points on the subject entitled "Talking Points on IMF Funding Request."
Treasury’s second talking point had the following under “Myth”:
Momentum Builds For Ron Paul's "Fed Transparency" Act
Joe Weisenthal | Business Insider
For years, Ron Paul has been a lone voice in Congress, questioning the wisdom of the Federal Reserve -- both its various chairmans and the institution itself. His dogged questioning of Alan Greenspan, and then Ben Bernanke, make for great TV (otherwise, those hearings are total snoozefests).
But now, as America wakes up to its dire financial situation and average people talk about things like "fractional reserve lending", the gold standard, and Zimbabwe-like inflation, he's finally getting some momentum.
It's baby steps, of course. Paul is the sponsor of the Federal Reserve Transparency act of 2009, which demands a GAO audit of the Fed, and a full report to Congress sometime next year. And it's gaining steam. It already has 175 co-sponsors in the House, and now a major Democrat, Rep. Alan Grayson (ironically, the same one who's proposing that stupid France vacation bill we mentioned this morning has joined on, and is urging his party colleagues to join them. Read more.
Even as US unemployment rolls soar to their highest levels in post-war history, employed workers face the worst conditions since the Great Depression, according to a front-page article in Friday’s USA Today.
Based on its analysis of employment data, the newspaper reports that pay cuts, reduced hours, furloughs and involuntary part-time work have driven the working class back to conditions not seen since the 1930s. Read more.
By BARBARA EHRENREICH
THE human side of the recession, in the new media genre that’s been called “recession porn,” is the story of an incremental descent from excess to frugality, from ease to austerity. The super-rich give up their personal jets; the upper middle class cut back on private Pilates classes; the merely middle class forgo vacations and evenings at Applebee’s. In some accounts, the recession is even described as the “great leveler,” smudging the dizzying levels of inequality that characterized the last couple of decades and squeezing everyone into a single great class, the Nouveau Poor, in which we will all drive tiny fuel-efficient cars and grow tomatoes on our porches.
But the outlook is not so cozy when we look at the effects of the recession on a group generally omitted from all the vivid narratives of downward mobility — the already poor, the estimated 20 percent to 30 percent of the population who struggle to get by in the best of times. This demographic, the working poor, have already been living in an economic depression of their own. From their point of view “the economy,” as a shared condition, is a fiction.
Look up HR 1207
Unlike the labor market collapse that killed millions of U.S. jobs in a matter of months, the nation's return to peak employment will not be nearly as uniform nor as swift.
While signs indicate that the worst of the recession may be over, only six metropolitan areas across the country are expected to regain their pre-recession employment levels by the end of 2009, according to projections from IHS Global Insight, a leading economic forecaster. Read more & view larger, interactive map.
Hundreds of Pennsylvanians say they refuse to wait for a nationwide solution to the problem of finding affordable health care. Thursday morning, they took their fight to Harrisburg.
It's called the Family and Business Healthcare Security Act. It's a single-payer option to healthcare. But this option is not without its critics. These protesters are demanding that PA take the lead in single- payer Healthcare. The rally, lead by Health Care for All PA, made their voices heard in the Capital Rotunda in Harrisburg. Pedro Rodriguez is the statewide organizer. Read more.
Swindlers, con men, and thieves could siphon off as much as $50 billion of the government's planned stimulus package as the money begins flooding the economy in coming months, according to David Williams, who runs Deloitte Financial Services Advisory and counsels clients on fraud prevention.
Williams predicted that about $500 million of the total $787 billion stimulus would be channeled into the traditional procurement network for government contracts, while the rest will be spent directly by the government or outside the corporate network.
"The rule of thumb typically is that of the about $500 billion worth of money that's going to run through the procurement process, somewhere between 5% and 10% of that usually finds it way into potential problems," Williams said. "That's sort of the benchmark that I use."
Companies will face increased pressure to try to stem the tide, and need to be prepared to safeguard data as well as the cash, according to Williams.
Williams said this week that the money flowing from the current stimulus package is particularly vulnerable to fraud because almost all movement of money is now done electronically. Read more.
By STEPHEN C. WEBSTER, Raw Story
After months of activism and lobbying by Congressman Ron Paul’s supporters, House Resolution 1207, the Federal Reserve Transparency Act, will move out of committee to be debated by the full House of Representatives.
In a show of cross-party unity, Ohio Democratic Congressman Dennis Kucinich became the bill’s 218th co-sponsor, pushing it over the threshold for debate in Congress.
The bill, which achieved co-sponsorship by 222 members of the House on Thursday, has been in consideration by the House Financial Services Committee since Feb. 26.
Congressman Kucinich, along with Rep. Edolphus Towns (D-NY), announced Tuesday that the House Financial Services Committee will subpoena the Federal Reserve to ascertain the details of the Fed’s agreements with Bank of America in the institution’s acquisition of Merrill Lynch.
By Danny Schechter
Can it possibly be true that Congress can’t walk and chew gum at the same time? This question is prompted by the announcement that financial reform is being pushed back as health care becomes the priority.
READ THE REST.
Dollar’s Reserve Status May Deteriorate, Roubini Says
By Natalie Weeks and Mark Deen | Bloomberg
The dollar’s status as the world economy’s sole reserve currency may deteriorate, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis.
“We may see complementary reserve currencies,” Roubini said at a conference today in Athens. While it’s “not going to happen overnight,” the development “will diminish the role of the dollar over time.”
The dollar’s status has come into question as leaders of Brazil, Russia, India and China discuss substituting other assets for their dollar holdings amid a ballooning budget deficit that keeps the U.S. dependent on foreign financing. China alone owns about $744 billion of U.S. Treasury bonds among its $2 trillion of foreign-exchange reserves. Read more.
Give America a choice. We support healthcare reform that allows individual Americans to choose either a universally available public healthcare option like Medicare or for-profit private insurance. A public option is the only way to guarantee healthcare for all Americans and its inclusion is non- negotiable.
Any legislation without the choice of a public option is only insurance reform and not the healthcare reform America needs. Read more, sign petition.
KBR Inc. wasted billions of dollars through inefficiencies, lax oversight and poor management of its contract to support U.S. troops in Iraq and Afghanistan, according to an independent, bipartisan panel.
The contract -- to provide housing, food, laundry, mail delivery and fuel for U.S. troops -- was ultimately worth $31.7 billion, with most of the work being done in Iraq and Kuwait.
“The services could have been delivered for billions of dollars less,” the commission stated in a report released today at a hearing of the House Oversight and Government Reform’s national security panel. “Substantial evidence supports the view” that KBR’s services “cost too much.”
The Wartime Contracting Commission, in its first report since Congress established it last year, gives the most critical assessment to date of the contract that Houston-based KBR, then a unit of Halliburton Co., won in December 2001, shortly after the U.S. invaded Afghanistan. Read more.
Jean Johnson is 81 years old and suffering from diabetes. But instead of relaxing in retirement, she recently started a new job.
"I need money. My social security check just doesn't make it, with rent and the gas bill to pay," said Johnson, who took a job in March at a library in Danforth, Illinois. "I need to work."
Amid the economic downturn, shrinking retirement accounts, increasing costs for food and medicine, and stiff competition for even entry-level jobs, evidence is building that the dream of a comfortable retirement is dying for many Americans.
The ranks of the elderly looking for work has swelled more than 120 percent to more than 1.8 million in the last year. Among that group, those who were 75 and older increased by 80 percent, according to data from the National Council on Aging.
There are some 29 million seniors - those 55 and older - employed or actively looking for work in the United States, which is about 18 percent of the civilian labor force.
And their numbers are expected to grow. Read more.
By Dave Lindorff
My bank, a small regional institution that was not involved in sub-prime lending, and that was not a recipient of any TARP bailout money, cut off my home equity line of credit two weeks ago. They did it abruptly, with no notice—I only discovered it had happened when I tried to get a $500 advance from it to cover a payment I was making on my credit card. When I asked what was going on, the local branch manager informed me that “we are closing out a lot of credit lines while we reassess the value of houses in this region, which have been falling.”
This ersatz capitalism, where losses are socialised and profits privatised, is doomed to failure. Incentives are distorted. There is no market discipline. The too-big-to-be-restructured banks know that they can gamble with impunity — and, with the Federal Reserve making funds available at near-zero interest rates, there is ample money to do so. Some have called this "socialism with American characteristics". But socialism is concerned about ordinary individuals. By contrast, the US has provided little help for the millions of its people who are losing their homes. Workers who lose their jobs receive only 39 weeks of limited unemployment benefits, and are then left on their own. And, when they lose their jobs, most also lose their health insurance.
With all the talk of "green shoots" of economic recovery, America's banks are resisting efforts to regulate them. While politicians talk about their commitment to regulatory reform to prevent a recurrence of the crisis, this is one area where the devil really is in the details — and the banks will muster what muscle they have left to ensure that they have ample room to continue as they have in the past.
The old system worked well for the banks so why should they embrace change? Indeed, the efforts to rescue them devoted such little thought to the kind of post-crisis financial system we want, that we will end up with a banking system that is less competitive, with the large banks that were "too big to fail" even larger.
It has long been recognised that the US banks that are too big to fail are also too big to be managed. That is one reason the performance of several has been so dismal. When they fail, the Government engineers a financial restructuring and provides deposit insurance, gaining a stake in their future. Officials know that if they wait too long, zombie or near-zombie banks — which have little or no net worth, but are treated as if they were viable institutions — are likely to "gamble on resurrection". If they take big bets and win, they walk away with the proceeds, if they fail, the Government picks up the tab. Read more.
House Oversight and Government Reform Committee Subpoenas Federal Reserve to Obtain BofA-Merrill Lynch Documents
Towns, Issa, Kucinich Demand Documents for Hearing This Week
Washington D.C. (June 8, 2009) -- House Oversight and Government Reform Committee Chairman Edolphus Towns (D-NY) and Ranking Member Darrell Issa (R-CA) today served a subpoena on the Federal Reserve (the Fed) to compel it to turn over documents related to Bank of America’s acquisition of Merrill Lynch.
The full committee and Domestic Policy Subcommittee, under the leadership of Chairman Dennis Kucinich (D-OH), have been investigating the circumstances surrounding the federal government’s bailout of the Bank of America-Merrill Lynch transaction. Specific documents subpoenaed include emails, notes of conversations and other documents.
Financial regulator seeks powers to curb excess speculation
By Kevin G. Hall | McClatchy Newspapers
If Congress grants the commission's wishes, big Wall Street players such as Goldman Sachs, Morgan Stanley, JP Morgan Chase and others would be subject to capital requirements, new business-conduct rules and more extensive reporting and recordkeeping requirements.
Firing the opening shot in a likely battle with Wall Street, the federal regulator who's overseeing the trading of oil contracts asked Congress on Thursday for broad powers to regulate the exotic private contracts that are thought to contribute to rising oil prices and the global financial crisis.
Testifying before the Senate Agriculture Committee, Commodity Futures Trading Commission Chairman Gary Gensler told lawmakers that he needs broad authority to bring all derivatives contracts under regulatory supervision. Derivatives involve bets that derive their value based on future prices of some underlying asset, such as oil contracts, interest rates, currency or even bonds and other forms of credit.
The new commission chief also called for an additional set of rules for swaps dealers, big global financial institutions that dominate activity in these markets. These rules would force players on both sides of a transaction in these markets to set aside cash to cover potential losses.
The global financial system nearly collapsed during the last four months of 2008 after the Federal Reserve and the Treasury Department rescued insurance giant American International Group. AIG was rescued because it had issued trillions of dollars in insurance-like private derivatives contracts and had insufficient reserves to cover its losses.
"The current financial crisis has taught us that the derivatives trading activities of a single firm can threaten the entire financial system and that all such firms should be subject to robust federal regulation," Gensler said. Read more.
The Great U-Turn: Global Migration Flows Reverse for the First Time Since the Depression as Work in the Rich World Dries Up
The Great U-Turn: Global Migration Flows Reverse for the First Time Since the Depression as Work in the Rich World Dries Up
By Patrick Barta and Joel Millman | WSJ
Brígido de Jesús González lived in Queens, N.Y., for the past 20 years, working as a landscaper to support his wife and kids back in El Salvador. But with the recession clobbering his business, the illegal immigrant decided to pack up and return to his native country -- for good.
"I was thinking [of opening] a mechanic's shop for cars, or maybe a gas place, where my neighbors can come and fill up their propane tanks," says Mr. González, 50. The new businesses could be a good way to help his two sons, who now live in New York, if things get worse north of the border. "I can give them jobs if they want to come home," he says.
The developed world, which for decades has offered a difficult but promising path to upward mobility, appears to be losing its allure. Unemployment is rising, and backlashes against foreign workers are mounting.
The result is potentially the biggest turnaround in migration flows since the Great Depression, economists say. Read more.
Though employment losses have slowed in May, many have already lost large numbers of jobs over this recession and therefore have fewer jobs left to lose.
The economy lost another 345,000 jobs in May. For the first time in a year, there were upward revisions to the past months’ data, with March and April’s combined employment revised upward by 72,000 jobs. The establishment survey reports 1.5 million jobs lost over the last three months. With this report, employment is now down 6.0 million jobs from its peak in December 2007— the 4.3 percent decline reflecting the largest relative loss of jobs in over 50 years. With fewer jobs left to lose, job loss is now occurring only at the fast pace of September and October of 2008.
The household survey showed a sharp rise in the unemployment rate to 9.4 percent from 8.9 percent in April—the highest rate in nearly 26 years. After showing a gain of 120,000 jobs in April, the household survey showed a loss of 437,000 jobs in May....
Adjusted for age composition and survey, the unemployment rate would now be equal to 10.7 percent, compared to a post-World War II peak of 10.8 percent in 1982. When internationally comparable data is released next month, the rate of unemployment in the United States will almost certainly be higher than that in the Euro Area.
WE DON'T NEED THE GENERAL MOTORS CORPORATION
by Mike Ferner
Times are anxious indeed, but simultaneously we are face-to-face with an extremely rare chance to replace our transportation system with something we can literally live with.
To take advantage of this uncommon opportunity we will have to do something far more profound, yet less costly, than a government bailout or an act of Congress. We will have to, as Paul Newman said in Cool Hand Luke, "get our minds right" on one simple fact: what we need is reliable, sustainable transportation. That does not mean we need General Motors Corporation or even cars. Contemplate the freedom implied in that statement for just a moment: we do not need General Motors Corporation.
The results of eight years of Bush-Cheney at the helm make the demise of the Republican Party an easy call. Our financial system is on life support. The major banks are insolvent, according to banking and legal authority William K. Black. If they’re not, they’re in intensive care. No matter how many trillions of dollars worth of infusions they receive, they’re not making loans. The economy is in a free fall with growth down 6% a quarter and job losses running at nearly 600,000 a month. We’re stuck in two catastrophic wars. Despite President Obama’s election, we’re viewed with suspicion and disregard throughout the world.