Showing posts with label Financial crisis. Show all posts
Showing posts with label Financial crisis. Show all posts

Saturday, December 21, 2013

95 % of economic gains go to the wealthiest 1% of Americans

How many Americans are left out in the cold this holiday season?
Christmas is near, and I'm looking forward to having family over for dinner. I've got all the necessities on hand for our traditional holiday meal, my decorations are in place, and gifts for my guests are wrapped and under the tree.

In the meantime, I'm anticipating going to the theater this afternoon with a friend.

However, the joy of the season has been dampened for me by this op-ed by Robert Reich, Chancellor's Professor of Public Policy, University of California at Berkeley: The meaning of a Decent Society. Reich reminds us that our nation is not living up to its pretensions of equality for all:

It's the season to show concern for the less fortunate among us. We should also be concerned about the widening gap between the most fortunate and everyone else.

Although it's still possible to win the lottery (your chance of winning $636 million in the recent Mega Millions sweepstakes was one in 259 million), the biggest lottery of all is what family we're born into. Our life chances are now determined to an unprecedented degree by the wealth of our parents.
That's not always been the case. The faith that anyone could move from rags to riches -- with enough guts and gumption, hard work and nose to the grindstone -- was once at the core of the American Dream.

And equal opportunity was the heart of the American creed. Although imperfectly achieved, that ideal eventually propelled us to overcome legalized segregation by race, and to guarantee civil rights. It fueled efforts to improve all our schools and widen access to higher education. It pushed the nation to help the unemployed, raise the minimum wage, and provide pathways to good jobs. Much of this was financed by taxes on the most fortunate.

But for more than three decades we've been going backwards. It's far more difficult today for a child from a poor family to become a middle-class or wealthy adult. Or even for a middle-class child to become wealthy.

The major reason is widening inequality. The longer the ladder, the harder the climb. America is now more unequal that it's been for eighty or more years, with the most unequal distribution of income and wealth of all developed nations. Equal opportunity has become a pipe dream.

Read more:




Sunday, January 15, 2012

America’s social welfare state: relief for the rich!

In her campaign for the senate in Mass., Elizabeth Warren continues to take on the big banks. Photo courtesy of 1000awesomewomen.tumblr.com.


Dan Froomkin’s recent post, “Social Welfare State, American-Style, Means Relief For The Rich,” has attracted more than 8,000 comments from its readers. A quick scan indicates that hundreds of those comments support Froomkin’s thesis.

Anyone who followed the budget debates in 2011 is already aware that both Democratic and Republican leaders, supported by our corporate-owned media, favored cuts in Social Security and Medicare to reduce the deficit.

But keep in mind that those going after the safety net for the poor and the elderly repeatedly used the euphemism “entitlement programs” to equate even self-funded Social Security with welfare.

It’s good news that Froomkin’s post is drawing multitudes of readers as he emphatically points out that the real entitlements in our country benefit primarily the wealthy. Hopefully, members of both parties will reflect on that fact:

WASHINGTON -- Republican presidential contender Mitt Romney has taken to accusing President Barack Obama of trying to turn the United States into a European-style social welfare state.

The hyperbole about Obama's actions aside, the United States already is a social welfare state -- almost right up there with the Europeans -- if you measure the total amount of drain on the Treasury caused by spending and subsidies on such things as health care and retirement. 

The one big difference is that in the American social welfare state, a lot of the benefits go to the rich. 

"We spend a tremendous amount on private social welfare through tax subsidies," said Christopher Faricy, a political science professor at Washington State University whose forthcoming book is about our divided welfare state.

"It just goes to a drastically different population than what we usually associate with welfare programs," Faricy said.



Thursday, January 12, 2012

When will the Obama Administration investigate the perpetrators of the economic crisis?

Obama and bank officials. Photo credits: public domain.

Credo, Moveon.org, and other progressive organizations are joining forces to pressure the Obama Administration during this election year to investigate the big banks that caused the housing crisis and resulting recession.

Check out this message from Credo and sign the petition to get Obama to act:

Wall Street greed fueled the housing bubble, and it's not hard to find evidence of what appears to be widespread and pervasive fraud by the biggest players in the mortgage industry.
Yet, despite the work of a handful of brave state attorneys general, there has been an astonishing lack of investigation into the misdeeds and outright crimes that caused the financial crisis.
The investigations that do exist have barely begun to scratch the surface.
And without meaningful investigations, there won't be any accountability for the Wall Street crooks who drove our economy off a cliff.
The collapse of the housing bubble caused trillions of dollars in homeowner equity to evaporate, which directly led to our economy grinding to a halt.
And the ensuing wave of foreclosures — caused in no small part both by predatory loans designed to fail and out-and-out foreclosure fraud — has destroyed communities across the country and shrank the tax base of local governments right when there was the most need for the services they provide.
Yet with all the resources at its disposal, the Department of Justice and other federal entities have yet to announce a full investigation of the cause of this man-made economic catastrophe.
Quite the opposite. Thus far the president's advisors have been pushing for a bad settlement with the banks that lets them off the hook . But a bad settlement has been stopped so far by courageous progressive attorneys general supported by an army of grassroots activists like you.
We now have an opportunity to change the White House's strategy as the reelection campaign heats up, and get the president to come out on the right side of this issue.
The timing of this fight is critical.
The election calendar is working with us by pushing President Obama to be more aggressive than he's been. We saw this, for example, with his recent recess appointment of Richard Cordray to lead the Consumer Financial Protection Bureau.
And we know that President Obama's political team wants him to run against Wall Street.
CREDO is not alone in asking the Obama administration to launch a full investigation. We're joining with MoveOn and other progressive groups in this campaign.
If we make enough noise, it will be hard for the Obama administration to avoid calling for full investigations into the fraud that led to the housing crisis.
It's a completely reasonable ask, it's within his powers to call for a full investigation, and it's the right thing to do.
Thank you for speaking out. Your activism matters.
Matt Lockshin, Campaign Manager
CREDO Action from Working Assets

Saturday, September 12, 2009

Explaining Obamascare, er, Obamacare to “Normal” Americans

It’s surprising enough that the same liberal pundits who in the 2008 primary accused Hillary Clinton of racism and wanting Obama dead increasingly seem to have their heads out of the clouds and their feet on the ground. It’s even more surprising that Bob Herbert at the NY Times in Friday’s column titled The Wild Card is actually requesting his president to show some respect and tell the truth about Obamascare - I mean Obamacare - to “normal” Americans. Herbert offers a little truth-telling himself:


But there’s a wild card out there undermining the chances for real reform, and it’s not the crazies who have been disrupting health care forums or the disrespectful space cadet legislators like the South Carolina Congressman Joe (“You lie!”) Wilson. It’s the ordinary working men and women of America who are struggling with the worst economic downturn they have ever seen and who are worried that the big new plans that the Democrats have in store may not be in their best interests — and may not be affordable.


Many of those folks already have health insurance, and many voted for Barack Obama. But they’re scared to death now as the economy continues to hemorrhage jobs and the budget deficits unfolding before their eyes are being counted in the trillions.


To get meaningful health care reform this time around, the Democrats will have to get that constituency on board. They haven’t yet.


For one thing, the various proposals are not at all clear to the general public and the average citizen is clueless as to how any of them would be paid for. To say that people are skeptical is the grossest understatement.


When the administration talks about getting hundreds of billions of dollars in savings from Medicare to help finance health care reform, it sends a shudder not just through Medicare recipients (who like their coverage just fine and don’t want anyone tampering with it), but also through younger individuals concerned about elderly relatives on Medicare.


The president said in his speech that the savings would come from eliminating “hundreds of billions of dollars in waste and fraud” and the elimination of some unwarranted subsidies. But to the finely tuned ear of the general public, that’s exactly what politicians always say: We’re going to get rid of waste and fraud.


The administration would contend that this time will be different. One can understand why some will remain unconvinced.


The president also said, as he estimated the cost of his proposal at $900 billion over 10 years, that he “will not sign a plan that adds one dime to our deficits — either now or in the future.”


I’m sure he means it. But I have not spoken to anyone, either on Capitol Hill or elsewhere, who believes that is doable. Now it may be that the public should not be so worried about the deficits. They had to be jacked up to get the country through this terrible economic crisis. And health care reform — real reform — is essential if long-term deficits are to be brought under control.



But people are worried about it. And just saying that health care reform will not add to the deficits is not enough to allay those fears.


What’s missing from all the talk about reform is how the runaway costs of health care, and all the dire consequences associated with them, can be reined in without a strong public insurance option and other big-time cost-saving initiatives.



If the government requires everyone — or nearly everyone — to have health insurance, the insurance companies and the pharmaceutical industry will reap a bonanza. What the Democrats still have to make clear to ordinary working men and women is how this latest incarnation of health care reform will be cost effective and broadly beneficial to them and to their government.





Friday, July 17, 2009

Krugman Unleashed: Obama Administration Has Made Another Financial Crisis More Likely

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Paul Krugman has gone easy on the Obama Administration in the past several weeks with only mild criticism and soft-pedaled warnings about the ongoing financial crisis. But record profits just reported by Goldman Sachs have set the Nobel-prize winning economist off this morning. In today’s NY Times op-ed, Krugman writes:

The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us?

First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America.

Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away.

Third, it shows that by rescuing the financial system without reforming it, Washington {the Obama Administration} has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely.


If you can stand to read more, go here.

Friday, June 26, 2009

“All Americans” Includes the 51% Who are Women and the Members of the LGBT Community

A well-written article by Bill Clinton published in the June 26th issue of Time Magazine triggered flashbacks to the 2008 campaign. From the day Barack Obama announced his run for the presidency, he and his supporters joined the fringe on the right and their media allies in maligning Bill Clinton personally and the record set by his administration. Taking down both Clintons was the aim in order to clear Obama’s path to the Democratic Party’s nomination.

One had to be stunned by the hypocrisy of the Obama camp in its fawning adulation of the womanizing Kennedy brothers, Jack and Ted, while even Michelle Obama was heard to make self-righteous snide remarks about Hillary’s relationship to Bill. So-called feminists have long attacked Hillary for keeping her marriage and family together over the years while I’ve not once heard anyone criticize the Kennedy wives or for that matter, the long-suffering Coretta Scott King, wife of the philandering MLK, Jr., for choosing to do the same.

No, in 2008, it was time to tear the Clintons apart with every sleazy tactic in the book including desperately trying to smear both Bill and Hillary as racists.

Today the Clintons continue to serve their country well. Hillary’s job approval as secretary of state holds steady above 70% and the former president remains as popular as ever. Their trials and tribulations over the years have no doubt given each of the Clintons a solid core of inner security that can withstand the assaults from vicious detractors from either the left or the right. (Left wing detractors, including the Obama camp, have since tripped over John Edwards and righties are now stumbling over Mark Sanford.)

His hard won inner security is evident in Bill’s Time Magazine piece; his generosity toward Obama is a credit to the former president’s statesmanship. He begins:

My grandfather was a dirt farmer with only a sixth-grade education. During the Depression, he eked out a living selling blocks of ice. But in those days, even though he was poor, he knew someone special: from listening to the fireside chats on the radio, he knew Franklin Roosevelt. And he believed that Roosevelt knew what his life was like — and cared about it too.

I grew up listening to my grandfather’s tales of what it was like to live through the Depression and the war and what Roosevelt meant to him. When I was President, in another time of change and uncertainty, I often looked at the portrait of F.D.R. in the Roosevelt Room and remembered my grandfather’s stories.

Besides having a deep personal connection to ordinary citizens, Roosevelt got the big things right. When he came into office during the Depression, he saw that the ills of the country could not be addressed without more aggressive involvement by the government. He ran for President as a fiscal conservative, promising to balance the budget. But unlike his predecessor, he quickly realized that, with prices collapsing and unemployment exploding, only the Federal Government could step into the breach and restart the economy.
In conclusion, Clinton writes:

The Depression gave F.D.R. the chance to use the power of government to complete the work his cousin had begun: to build a great middle class, help the poor work their way into it and give Americans a modicum of security in old age. His leadership during World War II and the plans he made for the U.N. and a permanent leadership role for the U.S. on the world stage cemented his legacy as one of our greatest Presidents. I thought of both Roosevelts when I told Americans that we needed a new social contract for the 21st century, one that would keep us moving toward a “more perfect union” in a highly interdependent, complex, ever changing world.

That is the challenge President Obama has inherited. I believe he will succeed in his efforts at economic recovery, health-care reform and taking big steps on climate change. Along the way, I hope he will be inspired by F.D.R.’s concern for all Americans, his relentless optimism, his penchant for experimentation, his relish for spirited debate among brilliant advisers and his unshakable faith in the promise of America.
Let’s continue to remind our current president that “all Americans” includes the 51% who are women and the members of the LGBT community; equal rights for the majority of the country’s population cannot wait until Obama’s priorities are met and his re-election is assured.

Friday, May 8, 2009

What’s a Nice Liberal Like Me Doing in a Place Like This?

Note to readers: Continued job losses in the hundreds of thousands each month remind me of what my co-workers and I went through a couple of years ago during a massive corporate downsizing. In the post below I reflect on lessons learned from that life-changing experience.

Cross-posted at the Widdershins

The local regional office of one of the world’s largest insurance companies looks out over the interstate where an endless stream of cars, trucks, and buses pours down the ramp and loops westward.

The building’s redbrick walls seal out the whine of freeway traffic. Rows of green-tinted windows allow occupants to look out, but prevent passersby from looking in. Uniformed security guards patrol the hulking, foursquare building and the well-tended acreage surrounding it.

Located in an upscale suburb of a large city, the state-of-the-art facility was built in the 90s to replace an older building in a less affluent neighborhood. The CEO and chairman of the board appeared with the lieutenant governor and other dignitaries at opening day ceremonies, complete with rousing music by a local band.

During my several years’ employment in the regional office, dubbed “the palace” by visiting agents, I occasionally looked around at my well-furnished workplace, provided by a company long known for its conservatism and powerful family culture and wondered, “What’s a nice liberal like me doing in a place like this?”

The answer eluded me until a couple of years ago when I took early retirement, prompted by a tsunami of consolidation and downsizing across our Fortune 500 Company. The powerful wave of change was unleashed by advances in computer technology that resulted in fewer employees required to do work that was no longer geographically constrained.

In the beginning, I’d considered my first job in the corporate world a temporary stopover; I planned to continue looking for employment where I could better use my skills in a more compatible environment.

My internal gyroscope of liberal values was fashioned by painful experience, clarified through study and reflection, and then dismantled and put back together again several times — before, during, and after three years of study at a progressive seminary. Mine was a thoroughly examined life.

Having grown up in a displaced Appalachian family, outsiders in the flatlands of northwestern Ohio, I easily empathized with others forced to overcome negative stereotypes.

Like many with roots in the mountains, I held in balance respect for the integrity of the individual and the importance of community. And I knew no other way to be in the world than to be myself.

Yet, I — after long decrying the harm wrought by stereotypes — committed the sin of stereotyping others. Through my liberal lens, I saw my fellow employees as hundreds of gray flannel clones. Men strode affably about in suits and ties. Women, wearing their version of the suit, darted down corridors on high heels, power walking to fit exercise into busy schedules.

Members of several minority groups appeared to be fully assimilated by the dominant culture, and I saw them, too, going about their business in monochrome.

I concluded the regional office housed a predominantly conservative population, devoted primarily to the god of capitalism. Corporate America was clearly not the place for me.

Nevertheless, perhaps unconsciously lulled into complacency by an ethos of benign paternalism (do your job, and we’ll take care of you), I stayed on. Eventually, I moved into the public affairs department as a writer and photographer for the regional employees’ magazine and Web site.

My new responsibilities gave me access to employees at all levels of the hierarchy. As I started seeing people as individuals, they emerged one by one from their previous gray anonymity. (The change to a more relaxed dress code helped.)

An American Indian explained how he juggled working full-time as an underwriter; serving as a member of the diversity council while participating in other company-sponsored volunteer activities; and pursuing his master’s degree.

An African-American manager taught me how to do the “pow,” a popular handshake in his culture. I knew I’d gotten it right the day he grinned and said, “You’re a mess.”

A Vietnamese employee, wearing his security badge on a lanyard with yin and yang symbolism, provided instruction in using meditation as a means to detach myself from difficult situations. I didn’t always succeed, but I learned to value this thoughtful man’s insights.

Two young claim reps, fresh out of college, contributed their zany sense of humor to my work life. A brief encounter with them in the hallway was usually enough to turn my day around.

One afternoon, a middle-aged vice president came in to get his photo updated. Afterward, he put his feet up on an open file drawer and talked about growing up in an orphanage in New York City. He was sincerely surprised by the success he had achieved and at the same time humbled by the experience. And speaking of shattered stereotypes, this insurance executive happened to be a Harley rider, who led an annual bikers’ run for charity.

A claims manager who knew the insurance business inside and out was readily available to review my stories. Noted for plain speaking, she had a knack for jolting me out of creeping corporate-speak. On one occasion, she told me, “Quoting a bunch of high profile managers doesn’t improve the quality of this article.”

Her point was well taken. It prompted me to paraphrase familiar biblical words of wisdom: If we say we are without spin, we deceive ourselves. My straightforward informal mentor and consultant, a high profile manager herself, also proved to be a kind, thoughtful, and faithful friend.

Over the passing months, many other employees revealed deeper aspects of themselves:

A mother shared what it was like to lose her son.

I witnessed the depth of feeling of a father whose six-year-old daughter was undergoing treatment for cancer.

A single woman talked about her escape from an abusive marriage and the struggle to bring up her children alone.

Basic connections transcended our differences. As trust developed, our conversations ventured into philosophy, ethics, politics, art, and even the risky terrain of religion. A mystical spirituality began swirling in and around the electronic hum of computers and everyday business discourse. It was a spirituality that affirmed our common humanity; revealed the power of our dreams, imagination, and vision; and hinted at mysteries none of us could adequately explain. It was an inclusive spirituality, unconfined by rigid dogma or particular religion.

Like employees in most workplaces, we reinforced bonds of community by celebrating birthdays, weddings, anniversaries, new babies, and promotions. We offered support when an employee’s life was touched by the death of a loved one. And when someone left, we gathered to bid farewell.

Our population was greater than many small towns, and we had similar amenities: a company store, medical department, mailroom, credit union, and ATM. We could also meet in the dining room to share a meal with friends.

Sheltered as we were within those solid brick walls, the storm that struck in early spring took most of us by surprise — even though we had worked virtually with our sister regional office for months and knew that one of our offices was slated to close.

We had heard a rumor the senior vice president of our recently merged, six-state territory would be in the office selected for closing on the day of the final announcement. Early that morning, a co-worker reported seeing him and other VIPs enter the building.

At the appointed hour we gathered in assigned rooms where the visiting VIPs recited prepared statements confirming our fears. It was a dizzying descent from being among the company’s “most valued assets” to suddenly discovering we were expendable.

We reacted with disbelief, pain, and anger as we began a prolonged process of grieving, not just for the likelihood of losing our jobs, but also for the certain incremental destruction of the unique community we had created.

The grief of those who had worked there the longest was infected by a sense of betrayal. One older employee observed, “When I was growing up, our parents advised us to find jobs in the insurance or banking industries — you could count on lifetime security.”

Members of various minority groups also felt betrayed. Employees were given the option to compete for job offers at the other site. This meant relocating westward from the outskirts of a multicultural, urban environment to a smaller, less diverse city. An African-American man illustrated well how much the dominant culture takes for granted. He said, “I don’t doubt the sincerity of our leadership, but they just don’t get it. How can I explain to them that I don’t want to live in a place where I have to drive 50 miles to find someone who knows how to cut my hair?”

The night following the announcement that our office would be closing, I dreamed I saw in the darkness a black limousine crawl slowly across a wooden bridge and then pull over to the side of the road. The occupants, our VIP visitors that day, got out of their car and walked over to look at a sign posted near the bridge. The sign read: “Danger — Ice.”

In Jungian thought, only gods may cross over a bridge in the realm of dreams; mortals must walk below. I interpreted my dream accordingly: business leaders are ill advised to play god with the lives of their employees.

Regrettably, even before the storm, some looting had already occurred. As the overall number of jobs dwindled at both locations, the occasional supervisor, prone to favoritism, and a few employees, too insecure to compete solely on merit, resorted to robbing others of their rightful opportunities; to my knowledge, they were never held accountable for their wrongdoing.

In the storm’s aftermath, the once lively dining room became quieter each day with muted conversation now seldom interrupted by bursts of laughter. I was having lunch alone on one occasion, when I heard a familiar voice: “You can keep reading your paper if you want to,” she said, as she sat down across from me. I folded my paper and put it aside.

Visibly tired from dealing with our tumultuous transition, this particular vice president spoke with passionate concern for the many employees whose lives were being drastically changed. “No one,” she said, “can take your skills away from you; they belong to you. Your security has to come from within yourself. No company can provide that for you.”

Even as she spoke, the old bureaucratic structure, already weakened, shuddered and collapsed around us. So ends the era of benign paternalism, I mentally noted, and all the false expectations it creates. Through the dust of falling rubble, however, I glimpsed the dawning of a new era in which employees would thereafter take their lives in their own hands and chart their own futures.

Eventually, our conversations turned from debating why our office was closing and not the other one to discussing what we were going to do next. Like a true community, neighbors began helping one another with resumes, networking, and moral support.

Good-byes became more frequent as employees left for jobs with other companies and a few accepted offers in our sister office. Those left behind experienced the early departures — at first a trickle — as an uninterrupted stream of loss.

The plan was to close the office in stages and when more specific announcements were made, I learned I would be leaving sooner than anticipated. I was among those over 55 who were offered early retirement; we were given three months’ notice and had to scramble to make critical decisions and complete necessary paperwork.

My retirement party was held the afternoon of my final day. Arriving a few minutes early, I watched guests crowd into the private dining room reserved for the occasion. I recognized representatives of different age groups, national origin, races, faith traditions, political affiliation, degrees of education, and job levels – from support personnel to the executive ranks.


There were no clones in gray flannel suits.


Of the gifts I received that day, my favorite was an official hooded, zip-front, logo-emblazoned Harley-Davidson jacket presented to me by the Harley-riding VP.

A few days later, seated at my kitchen table, I opened the bound collection of letters from my diverse group of friends. Their comments awakened me to a role I had unwittingly played while making my rounds with notepad and camera.

One employee wrote: “You’ve never been afraid to bring your whole self to work: ethics, religion, and politics. You forced us to bring our whole selves to work, too — just in case you challenged us. Well, it’s an odd thing and a pleasure to have an office full of whole people walking around. What an office you stirred up!”

That’s when I knew just what a nice liberal like me had been doing in a place like that.

I also knew something else: in today’s corporate world, too often governed solely by the bottom line, communities will continue to form and in time, dissolve. But the friendships forged during good times and bad, the truths shared, and the lessons learned will long endure — well past the inevitable day when that company name has faded into oblivion.

Monday, March 30, 2009

Anti-Establishment Krugman Goes After Obama and Geithner

The Midas Letter has posted Newsweek’s cover story on Paul Krugman this Monday morning, and it’s a good read. Never thought I’d feel a bond of admiration and affection for an economist but the Princeton professor and NY Times columnist warms my heart. It helps that his colleague at Princeton, historian Sean Wilentz, apparently feels a similar sense of kinship to the rebellious Nobel-Prize winning numbers guy.


Recall that Krugman recognized the superiority of Hillary Clinton's health care plan to Obama’s during the Democratic primary and come to think of it, Wilentz methodically debunked every egregious attempt by the Obama campaign to smear the Clintons as racists.


Go, Princeton!


But back to the NewsWeek article by Evan Thomas. Here’s the deal:


Paul Krugman has all the credentials of a ranking member of the East Coast liberal establishment: a column in The New York Times, a professorship at Princeton, a Nobel Prize in economics. He is the type you might expect to find holding forth at a Georgetown cocktail party or chumming around in the White House Mess of a Democratic administration. But in his published opinions, and perhaps in his very being, he is anti-establishment. Though he was a scourge of the Bush administration, he has been critical, if not hostile, to the Obama White House.

In his twice-a-week column and his blog, Conscience of a Liberal, he criticizes the Obamaites for trying to prop up a financial system that he regards as essentially a dead man walking. In conversation, he portrays Treasury Secretary Tim Geithner and other top officials as, in effect, tools of Wall Street (a ridiculous charge, say Geithner defenders). These men and women have "no venality," Krugman hastened to say in an interview with NEWSWEEK. But they are suffering from "osmosis," from simply spending too much time around investment bankers and the like. In his Times column the day Geithner announced the details of the administration's bank-rescue plan, Krugman described his "despair" that Obama "has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they're doing. It's as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street."

If you are of the establishment persuasion (and I am), reading Krugman makes you uneasy. You hope he's wrong, and you sense he's being a little harsh (especially about Geithner), but you have a creeping feeling that he knows something that others cannot, or will not, see. By definition, establishments believe in propping up the existing order. Members of the ruling class have a vested interest in keeping things pretty much the way they are. Safeguarding the status quo, protecting traditional institutions, can be healthy and useful, stabilizing and reassuring. But sometimes, beneath the pleasant murmur and tinkle of cocktails, the old guard cannot hear the sound of ice cracking. The in crowd of any age can be deceived by self-confidence, as Liaquat Ahamed has shown in "Lords of Finance," his new book about the folly of central bankers before the Great Depression, and David Halberstam revealed in his Vietnam War classic, "The Best and the Brightest." Krugman may be exaggerating the decay of the financial system or the devotion of Obama's team to preserving it. But what if he's right, or part right? What if President Obama is squandering his only chance to step in and nationalize—well, maybe not nationalize, that loaded word—but restructure the banks before they collapse altogether?

Read more.

Saturday, March 28, 2009

Is Obama’s “Change You Can Believe in” too Beholden to Wall Street and the Status Quo?

Paul Krugman hasn’t let up with his criticism of the Obama Administration’s response to the financial crisis. Krugman’s role as the loyal opposition has won him a cover story in next week’s Newsweek.

Mike Allen in Politico reports:


A stark image of Paul Krugman, the bearded New York Times op-ed columnist and Princeton economist, appears on the cover of next week’s Newsweek, with the headline “OBAMA IS WRONG: The Loyal Opposition of Paul Krugman.”



Krugman, who won the Nobel Prize in economics last fall, has been arguing that Obama is doing too little to respond to threats to the nation’s banking and economic system, and he has contended that the $787 billion stimulus bill should have been bigger.


Allen continues:

Krugman personifies a conundrum for Obama: He has to cope with complaints from the political left, as well as the more predictable opposition of the right.

The prolific professor has been pushing his views in his column, on his blog and in Rolling Stone.

Newsweek Editor Jon Meacham explains the choice in a letter to readers: “Every once a while, … a critic emerges who is more than a chatterer—a critic with credibility whose views seem more than a little plausible and who manages to rankle those in power in more than passing ways. As the debate over the rescue of the financial system—the crucial step toward stabilizing the economy and returning the country to prosperity—unfolds, the man on our cover this week, Paul Krugman of The New York Times, has emerged as the kind of critic who, as Evan Thomas writes, appears disturbingly close to the mark when he expresses his ‘despair’ over the administration’s bailout plan. …

“There is little doubt that Krugman—Nobel laureate and Princeton professor—has be come the voice of the loyal opposition. What is striking about this development is that Obama’s most thoughtful critic is taking on the president from the left at a time when, as Jonathan Alter notes, so many others are reflexively arguing that the administration is trying too much too soon.

"A devoted liberal, Krugman hungers for what he calls ‘a new New Deal,’ and he prides himself on his status as an outsider. (He is as much of an outsider as a Nobel laureate from Princeton with a column in the Times can be.) Is Krugman right? Is the Obama administration too beholden to Wall Street and to the status quo, trying to save a system that is beyond salvation? Does Obama have—despite the brayings of the right—too much faith in the markets at a time when prudence suggests that they cannot rescue themselves? We do not know yet, and will not for a while to come. But as Evan—hardly a rabble-rousing lefty—writes, a lot of people have a ‘creeping feeling’ that the Cassandra from Princeton may just be right. After all, the original Cassandra was.”

Monday, March 23, 2009

Arianna: "Just take the steering wheel out of Geithner's hands"

Well, I never thought I’d see the day when I’d actually appreciate something written by Arianna Huffington, but her post excerpted below on Timothy Geithner is a must read – bet she wishes she’d backed Hillary in the primary…


Now if only President Obama would get the word about his tax-challenged man in the Treasury Dept.:


Arianna Huffington: Geithner: Unable to Escape His Wall Street Weltanschauung

Tim Geithner's actions throughout his career, including his time as Treasury Secretary, are proof that the toxic thinking that got us into this mess is part of his DNA. That's why every proposal he comes up with is déjà vu all over again -- a remixed variation on the same tried-and-failed let-the-bankers-work-it-out approach championed by his predecessor, Hank Paulson. Geithner's Masters of the Universe, the people he still thinks are the ones we should turn to to save the day, are the same people who brought us here. And that is why Geithner either needs to go or keep his job but have his authority stripped and transferred to someone who does not share his Wall Street Weltenschauung. Use any window dressing you want, just take the steering wheel out of Geithner's hands.