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Why is Geithner dithering? Because he is asking the wrong question. The question he is posing is: how can the government save Citigroup? The right question is: how can the government rebuild the banking system?
President Obama deserves immense credit for being willing to spend serious money to prevent recession from becoming depression. He has resisted pressures from fiscal conservatives to put budget balance first, or to make social insurance bear the brunt of spending cuts down the road. And he has used his gifts as a teacher to enlist the broad support of the American people for a far-reaching strategy of public investment.
These days, the way executives make money instead is in the form of bonuses for years where they bring in a lot of return (and often times for years they don't), but the threat of being fired for too much risk taking is minimal. The more risk you take, the more money everyone makes. And it's not the partner's money you're playing with anymore. You're playing with house money. No one is minding the store anymore....These executives did not actually fail. They succeeded wildly. It's just that they had a different goal - to take home as much money as they possibly could for themselves. Mission accomplished!
“The Last Picture Show”: President Barack Obama’s Fiscal Year 2009 Budget
by Richard C. Cook
Greenbacks and programs like the Alaska Permanent Fund are part of what I call Dividend Economics. It’s why I’ve proposed the “Cook Plan,” which would be a system of vouchers for the necessities of life in the amount of $1,000 a month for any adult citizen who applied. A smaller amount would be provided as an allowance for children.
The vouchers would be taxed like any other income and would supplement other entitlements such as unemployment compensation, Social Security, etc. But taxes would be low for those who would use the vouchers as a main source of income. Under the plan, the vouchers would then be accepted as deposits at a new network of community savings banks that would lend at one percent interest to consumers, students, small businesses, local manufacturing establishments, and family farms.
Systemic Failure: Capitalism "Lays An Egg"
by Stephen Lendman
After the 1929 October 24, 28 and 29 market crash, the weekly entertainment industry magazine Variety (on October 30) published its most famous ever headline: "Wall Street Lays an Egg." In October 2008, history repeated, and since the October 2007 peak, equity prices plunged over 50% after the Dow and S & P (in February) posted their second worst ever monthly percentage declines - topped only in 1933 during the depths of the Great Depression. So far, the current market drop matches its 1929 - 1932 pace, and like then, shows no signs of abating.
Older soldiers find a niche in new Army | 'GI Jorge,' a father, grandfather and struggling property appraiser, is becoming a soldier at 40 to secure his family's financial future.
By Carol Rosenberg | Miami Herald
As the South Florida real estate market disintegrated and the number of jobless rose, 40-year-old Jorge Gil Muela made a young man's decision.
The five-foot-seven, 235-pound property appraiser walked into a recruiting center in a Kendall strip mall in December to join the Army. He was told to shed 50 pounds. It's a small price, he said, for the job security and pay, family health insurance and new career as a cargo handler.
A 185-pound Muela will report for duty at Fort Sill, Okla., next month, leaving his wife, children and grandchildren behind in Miami.
Karl Rove spars with Katrina vanden Heuvel on ABCNews' "This Week with George Stephanopoulous." Watch the complete roundtable here.
This is Rove's first time on ABCNews. Should Rove get a paycheck from ABCNews while ignoring Congressional subpeonas?
Why wasn't Rove arrested?
This is dated, but I decided to post it here for just that reason: "If we knew then, what they knew..." It's graph-intensive, and the source notes at the bottom of the screens are noteworthy, too, given the bailouts.
Here's a bit of background on Carlyle:
Remarkably, one of the most powerful organizations of the federal government, the Federal Reserve, is not subject to audit. Congressman Ron Paul wants to change that. He announced yesterday that he will be submitting a bill in the House of Representatives calling for an audit of the Fed. Paul states:
The Fed is now pledging to reveal to the public more about its economic predictions, and calls this greater transparency. This is little more than window-dressing, at best, utterly useless at worst...
~Chip's note: Ford Motor Company refused government bailout funds.
Congressman Dennis Kucinich (D-OH) today released the following statement after the Ford Motor Company announced that the Cleveland Engine Plant No. 1 will resume production and become the first Ford manufacturing site in the world to produce EcoBoost engines:
“This is a new beginning for Cleveland and the Ford Motor Company. I thank Ford management and the members of the United Auto Workers who have made this possible.
Islands, it's well known, are more vulnerable to species extinctions than continents. Could the same be true with economic extinctions? After all, as Rebecca Solnit wrote at this site, the small North Atlantic island of Iceland (pop. 320,000) went bust first in this ongoing, roiling economic crisis. Its economy had been riding high on speculative funny money for years when, in little more than a week in October, all three of its major banks cratered and the country's currency essentially ceased to have value. Not long after, Icelanders hit the streets of their capital, Reykjavik, launching protests, which have yet to end. Soon after, the government fell.
Now, the details: Treasury to give banks unlimited refills
By Kevin G. Hall | McClatchy Newspapers
Taking the wraps off its much anticipated bank-rescue plan, the Obama administration on Wednesday announced that it will provide a virtually unlimited solvency guarantee to the nation's 19 largest banks.
Shortly after Treasury unveiled details of its plan, President Barack Obama appeared before TV cameras with congressional leaders to launch what he hopes will be a quick move to replace what he called a 20th century financial regulatory system.
"This financial crisis was not inevitable," Obama said, noting that his goal wasn't to inhibit the free market but to regulate it better to prevent a repeat of the global meltdown now occurring.
Early this winter, the PBS "NewsHour with Jim Lehrer" interviewed the medical director at a community clinic in Northern California. He recalled the sight of military equipment moving along railroad tracks next to his office. "I've joked with my colleagues," Dr. David Katz said, "if we could just get one of those Abrams tanks we could probably fund all the primary care clinics for a year."
The comment didn't make it on the air - it was only included in video on a PBS Web site - and that was unfortunate. We need more public focus on what our tax dollars are buying.
Now to the day's post: All forms are made to be broken. It's been an unbroken form at TomDispatch for me to introduce each post. Sometimes, when no introductory comments spring to mind (particularly on subjects I know less about), I'll ask an author if he or she has come across a relevant news clipping or has any passing thoughts about what to write. When I asked Chip Ward the other day, he responded with an introduction so striking that I decided to turn the space over to him. And so here he is, in a site first, introducing himself. Tom]
The U.S. Economy: Designed to Fail
by Richard C. Cook | February 25, 2009
President Barack Obama showed a great deal of gumption in standing before Congress last night delivering his first speech to the joint assembly. All the trappings of power were on display as members of the House and Senate, the Supreme Court, the Joint Chiefs, the Cabinet, and the VIP guests hugged and waved at each other, radiant in their tailored attire only two nights after the Hollywood stars put on their own show on Oscar night.
Too bad neither the president, nor Vice President Joe Biden and Speaker of the House Nancy Pelosi applauding on the podium behind him, nor the jubilant Democrats with their solid majorities, nor the grumpy Republicans slouching in the minority across the aisle, know what they are doing as economic extinction stares the United States of America in the face.
When Barack Obama traveled to Elkhart, Indiana, to push his $800 billion economic recovery package two weeks ago, he made the former "RV capital of the world" a poster-child for the current economic crisis. Over the last year, as the British paper The Independent reported, "Practically the entire [recreational vehicle] industry has disappeared," leaving thousands of RV workers in Elkhart and the surrounding area out of work. As Daily Show host Jon Stewart summed the situation up: "Imagine your main industry combines the slowdown of the auto market with the plunging values in the housing sector." Unfortunately, the pain in Elkhart is no joke, and it only grew worse recently when local manufacturers Keystone RV Co. and Jayco Inc. announced more than 500 additional job cuts.
By Dave Lindorff
Barack Obama’s first address to Congress provided Americans with yet another example of competent speechmaking, and I suppose, given that we’ve just endured eight painful years of oratorical farce, being able to listen to your president without wincing is something.
The problem is that the way forward proposed by the president as laid out in this address was almost always half-hearted, wrong-headed or doomed.
Obama declared at the outset of his address that the economic crisis was the major issue confronting the country, and while one could argue that this crisis is merely a symptom of much bigger issues, like the nearly completed deindustrialization of the nation, the death grip of militarism, and the growing political power of corporations, one could also concede that there is an urgent need to deal with the deepening recession.
By Steve Cobble, MilitaryBudgetCutsNow
Congressman Barney Frank yesterday called a meeting on Capitol Hill to discuss his proposal to cut 25% from the military budget. He specifically invited grassroots activists and organizations interested in a less expensive, saner, less warlike military budget to come meet with him, to get the ball rolling towards reform.
Frank pushed the need for organizations and coalitions interested in domestic social needs to join the military budget cuts fight--otherwise, he said, they would not have the money for their own needed projects. He also handed out his excellent Nation essay.
By Dave Lindorff
Free market aficionados, particularly in the media, have long been wont to tell us that the "market knows best." That was always the line when progressives (remember when there used to be progressives in government?) would come up with some do-good scheme like a public jobs program during the Johnson War on Poverty, or Medicare, or bigger subsidies for urban mass transit. If the stock market sank, they'd pronounce whatever program or bill it was as a bad idea, because "the market" (meaning investors), had nixed it by selling shares.
The same kind of analytical brilliance has been routinely ascribed by economic pundits to investors when it comes to business decisions--particularly mergers and acquisitions, or divestments and breakups. If Bank of America announces that it is going to buy the foundering Merrill Lynch and shares of B of A fall, then the merger is a bad idea. If the shares rise, it's a good idea. And so it goes.
Earlier this month, the Fed increased by fivefold the size of its Term Asset-Backed Securities Loan Facility, or TALF, to as much as $1 trillion. The program is designed to improve credit in markets backed by consumer-linked assets including credit cards, automobile and student loans, and small business loans. (Bolding mine.)
U.S. Federal Reserve Chairman Ben Bernanke said Tuesday that the recession should end this year and 2010 "will be a year of recovery," if actions taken by the government lead to some stabilization in financial markets.
But that's a mighty "if" given recent severe declines in equity markets to levels not seen in more than a decade despite repeated announcements of government bank and housing rescue plans.
By Steven Thomma, McClatchy Newspapers
WASHINGTON — President Obama will convene a White House meeting next week to address runaway health-care costs. On Monday he called it key to reining in federal spending as he tries to balance plans to spend the country out of a recession with shoring up its long-term fiscal health.
Obama announced his plans for the health-care meeting as he met at the White House with lawmakers, economists and union officials to discuss his promise to cut the federal budget deficit in half by the end of his first term while simultaneously addressing longer-term problems. The event was billed as a "fiscal responsibility summit."
As Obama tries to cut the nation's $1.4 trillion budget deficit, rising health-care costs and the government's rising stake in health coverage will prove a difficult obstacle to work around.
Economist Dean Baker on Book TV: "Plunder and Blunder"
Dean Baker gives a great 1-hr. dissection of our economic plight.
Mr. Baker discusses the growth and "predictable" collapse of the housing and stock market bubbles and is critical of both the Reagan and Clinton administrations. He details the mistakes of Alan Greenspan and Robert Rubin. He offers suggestions for preventing additional financial crises and advocates massive government spending to combat the recession.
to watch Dean Baker on Book TV, click here.
Dispatches from the Front Lines of Economic Crisis
by Stephen Lendman
The more they do, the worse it gets, and world headlines confirm it. Recent ones include:
- The New York Times, February 17: "After Manhattan's Office Boom, a Hard Fall;"
- Washington Post, February 17: "Obama signs $787 billion stimulus bill; Dow Jones industrial average drops nearly 300 points;"
Dow theorist, Richard Russell, called it "one of the damnedest closes I've ever seen," within one point of the November 20 low, and added: "I thought President Obama outlawed torture in the US. Wall Street is not listening."
The next day both the Dow and Transportation averages hit new bear market lows. For Dow theorists like Russell and others, it's confirmation of lower ones to come.
Obama's Fiscal Sideshow | By John Perry
Zbigniew Brzezinski, a former national security advisor, has warned that the US could witness riots if economy continues its downward spiral.
"There's going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots!" said Brzezinski, President Jimmy Carter's national security advisor, in a recent interview with NBC.
"In 1907, when we had a massive banking crisis, when banks were beginning to collapse, there were going to be riots in the streets," he added.
At least 3.6 million jobs have been wiped out throughout the US since the recession began in December 2007. The jobless rate officially reached a 16-year high of 7.6% (11.6 million people) last month.
U.S. Secretary of State Hillary Clinton is back in Washington from her first official overseas trip - a four nation tour of Asia.
Before leaving Beijing, her final stop, Clinton urged China Sunday to keep buying U.S. debt and work with Washington to fix the global economic crisis.
She said Washington must incur more debt to China to boost the ailing U.S. economy and stimulate demand for Chinese products. She says it would not be in China's interest if the U.S. is unable to get its economy out of a recession.
China is the largest holder of U.S. Treasury bonds. Clinton says China's continued investment in U.S. Treasuries is a recognition that the two economies are tied together.
Chinese Foreign Minister Yang Jiechi told Clinton that both countries should boost economic policy coordination and reject protectionism in trade.
The world needs a "global New Deal" to haul it out of the economic crisis it faces, Prime Minister Gordon Brown of the United Kingdom said Sunday.
"We need a global New Deal -- a grand bargain between the countries and continents of this world -- so that the world economy can not only recover but... so the banking system can be based on... best principles," he said, referring to the 1930s American plan to fight the Great Depression.
Brown was speaking as the leaders of Europe's biggest economies met to try to forge a common position on the global financial crisis ahead of a major summit in London in April.
French President Nicolas Sarkozy said the world's response to the global financial meltdown had to be profound and long-lasting, not just tinkering around the edges.
Up to 120,000 protesters brought Dublin city centre to a standstill on Saturday over government austerity measures aimed at stabilising the once high-flying economy now wracked by recession.
The demonstration came a day after the global economic crisis led to another political casualty elsewhere in Europe, with Latvia's prime minister quitting as his country grapples with deepening recession.
Organised by the Irish Congress of Trade Unions (ICTU) and featuring teachers, police, civil servants and others, the Irish protest was the "first step in a rolling campaign of action," ICTU general secretary David Begg said.
Police put the number of protesters at up to 120,000.
Marchers are particularly opposed to a pension levy on some 350,000 public servants which is designed to save about 1.4 billion euros (1.8 billion dollars) this year.
According to IMPACT, Ireland's biggest public sector trade union, the levy will cost low to middle-income earners between 1,500 euros and 2,800 euros a year.
President Obama will hold a "fiscal responsibility summit" in Washington next Monday with the goal of reining in government spending. Watch out.
With our federal budget deficit heading toward $1.4 trillion this year, or nearly 10% of our overall economy, something must be done. Look out.
Obama adviser John Podesta says the summit is the first step in a process to help the public "understand how the financial balance sheet of the federal government comes back into order."
Translation: Middle class and poor folks are going to really get nailed.
According to the Washington Post Obama's team has invited big business, economists and a range of other "special interests" to the event which will feature five breakout sessions. Larry Summers (refer to Naomi Klein interview here) will lead the discussion on Social Security. Hold onto your hat.
Report: Nearly 75% of ex-Bush officials looking for jobs are unemployed
Stephen C. Webster | Raw Story
While the market for job-seekers in the United States might be sour, for most it isn't as impenetrable as it is for the nearly 3,000 former members of the Bush administration.
Between 70-75 percent who are looking for full-time work still haven't found new jobs, according to a Saturday report by the Wall St. Journal.
"That 'is much, much worse' than when Ronald Reagan, George H.W. Bush and Bill Clinton left the White House," Carlos M. Gutierrez, who served as Bush's commerce secretary, told the paper.