Notes feb 11
February 13, 2009 § Leave a comment
This is a really terrific article.
Why Republicans Won’t Support the Stimulus
Why are Senate Republicans (all, that is, except the lonely moderates Collins, Snowe, and Specter) nixing the stimulus package, as House Republicans did? Not because Obama failed to compromise — he gave them the tax breaks they wanted, included a whopper for business. Not because Senate Democrats failed to bend — they agreed to trim more than $100 billion out of a previous version of the bill. Not because Senate Republicans are doctrinally opposed to deficit spending — many of them happily voted for Bush spending and tax cuts that doubled the federal debt.
For an alternative view.
“It just goes to show you,” writes Lew Rockwell in today’s Mises Institute feature article, “that the presidency is something like a drug. It makes people lose all connection to reality. Part of the reality that Obama needs to recognize is that the New Deal was a calamity far worse than the initial market downturn that began it. He needs to stop basing his policies on dumbed-down civics texts versions of events and consider the economic logic.
“With his rhetoric and policies, he has decided to demonize private enterprise, just as FDR did, as a way to present government as the great savior…
“You cannot make a country rich by looting taxpayers and paying people to pound nails into siding at public schools. These activities amount to capital consumption. They are not sources of investment. You can say that they are stupid tasks or wonderful tasks, but it is not a matter of ideology as to whether such public projects will make us all wealthier. They will not. They drain the sources of wealth from society. They represent a cost, not a blessing.
“That was also true of Bush’s dumb stimulus program. He was only bailing out his friends at our expense. The effect was to give a little longer life to institutions that were failing anyway. It’s pathetic that the Republicans ever went along with it. You will notice that the scheme didn’t actually work.
“Well, Obama is doing the same thing, though rewarding a different set of friends. This is not wealth production. This is wealth consumption. Do enough of this nonsense and you can destroy the livelihoods of an entire generation.”
Administration officials were greeted with sarcasm and laughter Monday night when they briefed lawmakers and congressional staff on Treasury Secretary Tim Geithner’s new financial-sector bailout project, according to people who were in the room.
The laughter was at its height when Obama officials explained that the White House planned to guarantee a wide swath of toxic assets — which they referred to as “legacy assets” — but wouldn’t be asking Congress for money. Rep. Brad Sherman (D-CA), a bailout opponent in the fall, asked the officials to give Congress the total dollar figure for which they were on the hook. The officials said that they couldn’t provide a number, a response met by chuckling that was bipartisan, but tilted toward the GOP side. By guaranteeing the assets, Geithner hopes he can persuade the private sector to purchase a portion of them.
Congress may be able to do little more than laugh. The Federal Reserve, in extreme situations, is allowed to intervene in the financial markets in dramatic ways. The Fed jumped into the markets long before the $700 billion bailout passed through Congress by guaranteeing toxic assets held by CitiGroup and Bank of America.
The White House still has roughly $350 billion in Congress-appropriated TARP funds to use, and the officials told the group Monday night that it planned to use $50 billion for foreclosure mitigation and further amounts to shore up bank balance sheets.
The officials also said that a review of the bank’s books would be undertaken to determine whether they could handle an even more severe economic downturn.
People briefed on the meeting also said that the White House proposed expanding the Temporary Asset Lending Facility (TALF) by up to one trillion dollars in order to shore up the market for credit card and auto loans. It would be a joint project of the Federal Deposit Insurance Corporation and the Treasury’s TARP funds
Three federal judges have ruled that overcrowding in California prisons means that “there are not enough clinical facilities or resources to accommodate inmates with medical or mental health needs at the level of care they require.”
If the state is ordered to reduce the prison population, it would likely be able to do so over two or three years, so it would not have to release large numbers of inmates at once. Some methods of cutting the population include limiting new admissions, changing policies so parole violators return to prison less frequently, and giving prisoners more time off of their sentences for good behavior and rehabilitation efforts.
And re Wealth of Nations
As Smith pointed out: “The government of an exclusive company of merchants, is, perhaps, the worst of all governments.” [570
And, very helpful
and the book is at
“Continuing the Conversation” began as a series of meetings in second half of 2008 between Linda Alepin (Global Women’s Leadership Network), Doug Carmichael (Stanford), Jeff Chow (Morgan Stanley), and Anne Firth Murray (Stanford, formerly Global Fund for Women). It was clear that the impact of the economic crisis of 2008 was going to be dramatic and that we should take action.
Our goal is to help people and our society cope with the rapid deterioration in our economic and social environments and manage the efforts to stimulate a recovery toward a healthier community.
In times of uncertainty and confusion, we should evaluate and clarify our current situation, clarify our goals and develop a strategic plan with the tactics to support our strategies. To help coordinate and streamline our efforts, “Continuing the Conversation” is hosting strategic conversations between concerned individuals from Nonprofit, For-profit and academic organizations where we can:
- Learn from each other,
- Track current events,
- Examine different projects, their strategies and related tactics,
- Clarify goals,
- See linkages and synergies to other efforts,
- Identify gaps,
- Ask for help, and
Increase the range of participation, diversity, and breadth of our efforts.
We invite you to participate in our conversations. We meet weekly on Thursday mornings at 8 AM.
Palo Alto Strategy Center, located upstairs at Rich Green Ink
410 Sherman Ave. (near El Camino and California)
Palo Alto, CA
Every Thursday from 8:00 to 9:00 am,
UPCOMING MEETING TOPICS
Thursday, February 12, 2009
Topic: Sustainable Food Sources that are:
- Environmentally sound,
- Economically viable,
- Socially responsible,
- Nonexploitative, and
Serve as a foundation for future generations.
UC Santa Cruz
PCOMING MEETING TOPICS
Thursday, February 12, 2009
Topic: Sustainable Food Sources that are:
o Environmentally sound,
o Economically viable,
o Socially responsible,
o Nonexploitative, and
o Serve as a foundation for future generations.
UC Santa Cruz
And, very good.
What happened to the global economy and what we can do about it
When you cut through the technical details and the marketing distractions, sorting out the US banking fiasco comes down to one, and only one, question. How tough are you willing to be on the people who control the country’s large banks?
One option is to be gentle with them and adopt only ideas that they pre-approve. This route involves complicated schemes to purchase, lend against, or otherwise “wash” toxic assets out of the banks using taxpayer subsidies. This will be expensive (for the taxpayer), messy politically, and – most likely – will not work, in the sense of restoring the banking system to something close to its normal mode of functioning; check with Hank Paulson for details.
Alternatively, you can be tough and take steps towards really assessing which banks are insolvent when you use market prices to value their assets. These banks can be taken over in a scaled-up FDIC-type procedure (no golden parachutes!), and controlling stakes in fully recapitalized banks can be sold off immediately to new private owners. The new private owners can handle, under proper anti-trust supervision, the break up the banks. This approach will be cheaper for the taxpayer (but nothing is free at this stage), easier to explain to the electorate and their representatives, and it will work – this is in fact the standard prescription because it always works. But it will not make powerful bankers happy.
So which way is the Obama Administration heading? We honestly don’t yet know; the signals are mixed.
Indications that we are rolling over for the banker lobby are: (1) weak executive compensation caps, announced last week, and (2) insufficient money available or yet sought to back up the recapitalization that should follow the “once and for all” stress test of the banking system. The math on point (2) is: there is only $320bn left from TARP, of which – we learned today – $100bn is to go in further support for the securitized credit market, $50bn for housing support (and this could end up higher), and at least $50bn for private-public toxic asset purchase/loan scheme (thi is my inference from the statement that this bank should be $500bn going on $1trn total). The $120bn or so left over is probably not enough to recapitalize one major troubled bank, let alone the entire system.
But there are also more positive signs. Secretary Geithner was much more critical of bankers and their compensation schemes than officials have been to date. And President Obama is clearly angered by bankers’ arrogant bonuses. The Administration’s messages of transparency and accountability are refreshing and exactly on the mark. And I liked this line from Geithner (from CNNMoney),
“These banks need to understand that access to government resources is a privilege, not a right. It’s not for the banks. It’s for the people, and companies depend on that.”
So how do you get the message across? Obviously, we need the comprehensive stress test immediately and it has to be transparent and very tough. And this is where David Axelrod and Rahm Emanuel have apparently been exactly right in the past 10 days. According to press reports (NYTyesterday and WSJ last week), both have pushed for tougher symbolic and substantive actions that would hurt bankers’ pocketbooks and weaken the largest banks.
Remember, weakening the big banks and their bosses should not be seen as an unfortunate side effect of beneficial medicine. It is exactly what we need to do under these circumstances. Unless and until these banks’ economic and political influence declines, we are stuck with too many people who know exactly what they can get away with because their organizations are “too big to fail.”
And weakening these banks (or actually having some of them go out of business and be broken up) as part of a comprehensive system reboot – with asset revaluations at market prices and a complete recapitalization program – will help return the credit system to normal.
For reasons that are not obvious, Axelrod and Emanuel have not prevailed on the degree of toughness towards the American Banking Oligarchy. But this may change. Let us hope it is soon.
On approach by Philanthropies- In spite of constraints, funders understand the importance of this moment, and many are eager that we not lose an historic opportunity to shift economic policy fundamentally towards more just and sustainable ends.
The attached 5 page report notes these and other key points to emerge from the December convening. The document also outlines an initial six-month Economic Crisis Response Initiative FNTG is organizing in collaboration with policy and grassroots groups, intended to help galvanize strategic and collective thinking among progressive forces in the US and abroad working to confront this crisis. This initiative
will also serve to keep the funding community informed and engaged in a process of learning and reflection, and to promote support for relevant
>initiatives and strategies that emerge.
how about this for obnoxious. It implis that it is the single job of the intelligent, talented, hard working and beautiful to make money.
It is the markets‘ job to reallocate money from the ignorant to the intelligent, from the lazy to the hard working and studious; from the naive to the educated, and from the speculator to the investor.