Zombie Banks

Zach Carter:

BofA and its predecessors Countrywide and Merrill Lynch accessed the Fed's Primary Dealer Credit Facility 416 times, for a total of $2.783 trillion. A full $476 billion in junk bonds were pledged as collateral for the loans, or roughly 17 percent. The PDCF is an overnight facility, so a lot of these loans are simply being rolled over day-to-day. Nevertheless, it's a staggering amount of money, with an enormous degree of totally worthless collateral being pledged to justify it.

The Fed and Treasury had to do something in 2008 to keep the financial system from falling off a cliff. But by treating the problem as a liquidity issue with no strings attached, they didn't solve the underlying problem: lots of very big banks were simply insolvent.

Now, over two years after TARP, it's clear that many of our largest banks are only "solvent" due to accounting irregularities being approved by regulators that are terrified of letting big banks go under. As a result of this fear, we aren't really regulating our banks.

So Paul Krugman's prediction of zombie banks creating a drag on the economy has not come true. The reality is, in fact, much worse. Krugman foresaw zombie banks that didn't lend due to capital concerns, preventing the recovery from getting off the ground. We're seeing plenty of that, but we're also seeing zombie banks actively prey on the economy through the foreclosure process in an effort to repair their balance sheets. The zombie banks aren't just failing to boost the economy, they're actively sabotaging it.

This post is probably pretty technical for most of you, but it's very interesting as providing insight into what economists are saying about our current mess.

Jobs - a Broader Perspective

I came across an article today that got me thinking about this, so I thought it would be useful give a general idea of where we are as an economy at the moment.  From the Bureau of Labor Statistics, in thousands:

                                                               Nov. ’11         July ‘05

1.  Total Population:                                   310,827         295,753

2.  Civilian Non-Institutional Population:         238,530         226,153

3.  Work Force:                                         153,904         151,122

4.  Employed:                                           139,061         143,283

         Full-Time                                         111,696         118,938

         Part-Time                                         27,365           24,351

Line 2 equals line 1 minus people under the age of 16, people in nursing homes and prisons and other institutions, and people in the armed forces (why they are subtracted out here – or treated as anything other than employed persons, is something I don’t understand).

Line 3 equals line 2 minus retirees, homemakers and others not working for personal reasons, students not currently seeking a job, and discouraged workers (workers who have not actively sought a job in the past 4 weeks).

Line 4 equals line 3 minus unemployed persons.  It includes part-time and full-time employees, which I have shown.

A couple of things to note.  The percentage of line 2 that is in the workforce has declined a lot over the last five years.  If the percentage stayed the same, the number would be almost 160 million.  Why this difference exists is not so clear - it is possible that a higher pecentage of people are retiring now than in the past, any insight on this would be appreciated.

But assuming workforce participation should be the same as before, to bring our economy today to the same place it was 5 years ago, we would need numbers like this (again in thousands):

2.  Civilian Non-Institutional Population:         238,530

3.  Work Force:                                         159,393

4.  Employed:                                           151,125

         Full-Time                                         125,440

         Part-Time                                          25,684

In other words, we would need over 12 million new full time jobs, and also to have nearly 2 million jobs that are currently part time become full-time, in order for us to be where we were five years ago.

The stock market rallied today because the number of private sector jobs last month grew by 93,000.  We won't know for sure whether these are full or part time jobs until Friday.

It’s all a matter of perspective I guess.         

Government Spending Must Be Cut - Just Don't Ask Me to Do It

Entirely predictable.

Three Major Reforms No One Will Consider

The deficit commission report has a number of thoughts about tax reform.  Some I like and some I dislike, and I will talk about them in the next few days.  But here are three major tax reform ideas that no one will ever propose:

1.  Eliminate the distinction between income from capital and other income.  This is an income tax.  The amount of tax you pay should be based on the amount of income you earn - period.  How you earn that income should be irrelevant.  This would be good for two reasons.  First, it would be fair.  Second, it would make sure that people make their business and economic decisions based on what makes the most sense from a business or economic perspective, without regard to their tax bills.

I speak from experience - there are a whole lot of tax advisors spending a whole lot of time advising people (mostly rich people, who are the only ones that can pay for this kind of advice) how get their income characterized as capital gains, so that their tax rate is lower.  And I would estimate that this distinction is one of the greatest causes of the complexity of the tax code - it is incredible how many provisions in the code exist solely to distinguish what is capital gain and what is ordinary income.  There is even a class of property the gain from which is treated as part capital and part ordinary!   One of the biggest tax loopholes in existence is the ability of hedge fund managers to make multi-millions of dollars and treat that income as capital gain.  This kind of gaming of the system has to end.

But, some will say, the government needs to encourage investment.  Poppycock.  Today there are hundreds of large corporations sitting on billions in cash that they are refusing to invest.  Why?  Because investment doesn't happen unless people are consuming as well.  Ford is not going to invest in increased production of cars if people aren't buying them.  Both sides are essential to a functioning economy.  Neither one is better or more important to the other.

2.  Fully integrate the corporate income tax and the personal income tax.  Stated differently, eliminate the double taxation of income earned through corporations.  This is not as difficult as it sounds, but to date all efforts to do this have involved lowering to corporate tax to mitigate the effects of double taxation.  To me, you can eliminate double taxation simply by allowing corporations to take a deduction for dividends paid to their shareholders, in the same way that they deduct interest paid on their bonds and other debt.  And, it goes without saying, corporate income tax rates and personal income tax rates should be the same.

How does this work?  Assume three corporations, A B and C.  Each of them makes $100 in profits.  A pays no dividends, B pays $50 of dividends, and C pays $100 of dividends.  A will pay tax on $100, B will pay tax on $50 ($100 of profits minus a deduction of $50 for dividends paid) and its shareholders will pay tax on $50, and C will pay no tax and its shareholders will pay tax on $100.  If the corporate and personal tax rates are the same, the government collects the same amount of tax on the $100 of profits in all three cases.

To me, this makes operating a business in corporate form tax neutral, as it should be.  People will still incorporate, but the decision to do so will be made for legal and business reasons, not for tax reasons.  To some extent, this is a narrower case of my general rule - income is income and it should be taxed the same regardless of how it is earned.

And frankly, I don't think the government should be encouraging people to operate in corporate form in any event.  There are two main reasons people incorporate - to raise capital, and to avoid liability.  Incorporation is not essential to the first (there are other ways to raise capital), and avoiding liability is really not something that should be overly encouraged.  We want people to take responsibility for their actions, don't we?

3.  Get rid of tax-exempt status for all legal entities.  This is one of the biggest revenue losers that exists in the Tax Code, and there really is no reason why it should be there.  There are all kinds of ways to make money.  For the government to say "the way you make money is really good, so you don't have to pay tax" is really insidious.  And this is true even if the entity is a charity, a college, a private foundation or whatever.

Now a couple of things to point out here, because I think people may get the wrong idea.  First, we have an income tax, and all I am saying is tax them on their income.  If they really are a non-profit, and they make no profit, then they won't pay any tax.  Further, it has always been part of our tax system that a gift is not income.  Thus, when the American Red Cross receives millions in contributions to help victims of Hurricane Katrina, none of that money would be income, and it would not be taken into account in determining the amount of tax they would have to pay.

On the other hand, payment for services rendered is income.  And so is interest on investments.  If you take an entity like, say, Harvard University, which collects millions of income in the form of tuition and fees from its students and billions in the form of income on its endowment, why should it be deemed special and not have to pay tax?  Same thing for a hospital.  Stated differently, if you really are a charitable or other kind of organization, you should not make a profit.  If you do make a profit, then like everyone else you should pay tax.

Now some people may consider churches to be a special case, and I understand that.  The big question I have here is what is a church?  Is Scientology a religion?  And do we really want the government to be making that decision?  Besides, as I said before, (i) gifts are not income, so the government won't tax what's left in the collection basket, and (ii) since this is the major source of their income, for most churches eliminating their tax exemption won't make a difference.

There are huge amounts of income being earned in our country that are exempt from tax.  The are additional huge amounts that are taxed at lower rates than other income.  This is neither fair nor wise.  I personally think that it skews economic and business decision-making in our country in ways that hurt the country as a whole.

The Cat Food Commission Tax Proposals

My recollection is that the purpose of the deficit commission was to come up with proposals to reduce the deficit.  My question, then, is why they have a different purpose for their tax proposals.  Here is what the  proposal says (page 22):

Tax Reform

Goals:

• Lower Rates
• Simplify the Code
• Broaden the Base
• Cut Spending in the Tax Code (Tax Expenditures)
• Improve Compliance (Tax Gap)
• Make America the Best Place in the World to Start and Grow a Business
• Reduce the Deficit

Why is reducing the deficit the at the bottom of this list of goals?

MERS

This seems to be Congress' answer to everything.  Let's just retroactively legalize corporate lawbreaking.

I've got a better idea - let's just have the federal government take over the property recording function - thereby overturning a literally centuries-old system that worked just fine until Wall Street decided that mortgages were commodities.  Then they can outsource the actual tracking of ownership to a private corporation - because we all know that private corporations operate more efficiently, right?

Oh - wait - isn't that what the banks did with MERS to begin with?

Why the Democrats Lost Last Week

Interesting post by Steve Benen.  I tend to agree with his analysis of this, but as always have my own two cents to contribute.

I have been disappointed with the wishy-washiness of our Democratic leadership really since Al Gore conceded the 2000 election.  They have rarely been willing to stand up for the principles of the party, even when they have the power to do it.  And the main reason for that is their fear of losing contributors to the Republicans.  Since most political donations come from corporate and financial elites, they feel they have to keep them happy - or at least happy enough - to keep the dollars flowing.  And since there are such huge amounts now being invested in political campaigns by those on the right, the Democratic leadership views it as crucial to keeps those lines of funding open.  Hence, they capitulate.

Obama negotiates a deal with pharmaceutical companies before even proposing a health care bill.

He capitulates on immunity for the telecomms companies for immunity from prosecution for their illegal wiretapping activities.

He capitulates on offshore drilling.

He capitulates on the stimulus - when massive amounts were needed - and needed to be in spending rather than in tax cuts - he capitulated on both ends.

The result is that we have policies little changed from the status quo under Obama.  And we have a public that views the Democratic Party as weak.  Even Democrats think so.

What I don't understand is why they didn't see what was happening in 2008.  Obama raised enormous amounts in small donations from millions of individual contributors.  My recollection is that while he raised millions from corporate America as well, he probably didn't need to in order to win the election - or at least, he didn't need to make himself so nearly beholden to our elites as he turned out to be.

I don't expect anything to change in the next couple of years - what with Citizens United opening the floodgates and making contribution-seeking even more imperative in the eyes of party leadership.

But I will say one thing - I will not support any candidate in 2012 - Obama included - who does not make reversing the impact of Citizens United a top priority.  Even if it means a court packing plan a la Roosevelt in 1937.

Finally

I could never understand why Obama wanted liberal groups to close up shop.  It was a disastrous decision. At least now he seems to recognize that.

Of course, I hate the current system the way it is, and the "fight fire with fire" mentality is what turned the democratic party into a bunch of centrist protectors of the corporate elite.  That was the whole goal behind Bill Clinton's Third Way - to get rich Americans to support Democrats again.  What we now have is two totally corrupt parties instead of one.

But since nothing is going to change between now and 2012, might as well fight fire with fire.

God Help Us

This is an example the great minds that will lead us out of this economic catastrophe.

Ack... the stupid...IT BURNS.

Isn't this illegal?

Whether it is or not, it sure is stupid.

IOKIYAR.

The Catfood Commission Draft Report

I'll have more to say on this later, but for now:

A Powerpoint presentation?!  WTF - can't these guys write complete sentences?

I did notice there were a number of proposals to cut spending on education.

How ironic.

Thanks, Richard

Great sentiment.  But where were you prior to the election?

For the record, I've searched the archive of Cohen columns for similar sentiments about health care reform and find nothing dating back to last May.

A Case Study

This is how the mainstream media acts when it's caught lying.

Trust me - putting it in the Style section is guaranteed to make sure that the general public never knows.

Obama and Bernanke

According to Krugman, they are two of a kind:

Think of it this way: Mr. Bernanke is getting the Obama treatment, and making the Obama response. He’s facing intense, knee-jerk opposition to his efforts to rescue the economy. In an effort to mute that criticism, he’s scaling back his plans in such a way as to guarantee that they’ll fail.

And the almost 15 million unemployed American workers, half of whom have been jobless for 21 weeks or more, will pay the price, as the slump goes on and on.

All they really care about is feeling the love of the political and financial elites - the "Village."  And because of that, they are doomed to fail.

It occurs to me that the same was true of George Bush.  Despite approval ratings in the 30s and 40s for most of his administration (he was in the 80s immediately after 911, but quickly frittered that away by invading Iraq), he remained enormously popular in the Village.  I could never understand why there was no sense of panic in the Bush White House when his approval ratings got so low, and now it's clear:  His approval in the Village was always strong, and that's all that really mattered.

It is the consensus outside of the Beltway that George Bush was among the worst presidents we ever had.  But in the Village, he is still beloved.

And until this kind of disconnect is rectified, the decline of America will continue.

Torches and Pitchforks

In the comments section following Paul Krugman's column today, an interesting question:

I agree with Paul Krugman entirely, on this column and many other recent ones. However, why aren't the unemployed, out of luck, foreclosed on Americans speaking up and at least waving the flag for help, so that the media can focus on them? Where are all those parents, who recently kept their children on their health insurance policy, because those college grad children can barely find jobs even 18 months after graduation?? Where are all the small business owners who had to close, or the larger business owners that had to lay off many employees. These people need to be shown on the media much, much more. 

So many families are in dire straits financially, and so many younger families and older families are moving back in with parents just to keep a roof over their heads, or ease a transition back to school or to a much lower paying job. We need to see and hear from the faces of these Americans, NOT the talking heads on the TV or the rich politicians in Congress. Do these ordinary Americans really feel fiscal conservativism and reducing the deficit is going to give them a lift--right now, tomorrow? Let's hear from them, and ask them why they think that will give them jobs. Put their opinions -- words, faces and situations on TV, newpapers and radio -- connect to the real people. More Americans need help than our media ever has acknowledged. These people are the core of the economy.

Several thoughts on this:


First, there are many fewer protests of the sort described by this commenter than there were in the past.  In the Depression era, we had tents cities on the Mall in Washington and elsewhere ("Hoovervilles") full of desperate working class people protesting the misery that had be wrought upon them.  But I think for many Americans - particularly those on the moderate-left side - protests have come to be viewed as useless - and worse, dangerous.  Consider the person who had their head stomped last week protesting Rand Paul.  The other side is crazy and dangerous, and people are not willing to risk their lives - yet.


Second, even if we had these kinds of protests, the vast majority of Americans would ignore them.  I am reminded of the week before the invasion of Iraq, where literally millions of Americans marched in protest against the war, including more than half a million in New York City alone, with very little coverage in the media.  Or the LGBT march last fall that drew hundreds of thousands to the mall in Washington but was completely ignored by the media (here is a funny take on that by John Stewart at the time it happened).   The media is now a complete part of the corporate elite - the relaxation of FCC ownership rules have had the full effect that was intended - so that the voices of a large percentage of Americans are systematically excluded from the debate on the mainstream media.


Third, to some extent, we are having these kinds of protests.  I firmly believe that the tea party's strength derives from the economic crisis we are now experiencing.  Unfortunately, it is also driven by cultural issues - notably a vicious backlash on the part of a minority of Americans against a black president.  And unfortunately these people are more than willing to listen to the economic advice of people who they think identify with their "cultural" issues, even if that economic advice is directly contrary to what is actually needed to prevent their further economic decline.


Fourth, I note the following statement by the commenter: "these people are the core of our economy."  Actually, to corporate America (and by extension the corporate media) - that is just plain wrong.  People are assets - to be used up and replaced where it makes the most sense for the bottom line.  Our corporate elites no longer believe themselves dependent on a strong middle class for their economic well being - in their minds, a strong middle class is a deterrent to their economic progress, not a condition of it.  The more workers make, the less their profits, and so they are willing to jettison American workers in order to help their bottom line.  Indeed, the story of America's economy over the last three decades is that everything is second to the sanctity of corporate profit.  And you will hear very little in the way of a contrary message from the mainstream media.


Finally, the commenter things ordinary people should be asked "do these ordinary Americans, really feel that fiscal conservatism and reducing the deficit are going to give them a lift, right now, tomorrow?"  The answer, I'm afraid, is yes.  The American public has been bombarded with the idea that the government is the problem, and if we only had a smaller government everything would be okay.  And nowhere does one hear a contrary message.  People don't know, for example, that the economy we have now, with its bubbles and busts and financial crises and extended periods of economic misery, is eerily similar to the economy we had 100 years ago, and that the primary reason we are in this mess is that the reforms that were instituted in the 1930s to prevent the kind of economic crisis we are now experiencing have been systematically dismantled over the last 30 years.  They are certainly not hearing that on TV, nor are they learning it in school.  In this respect, perhaps the scariest thing we are witnessing in our country right now is the continuing weakening of public education and the rise of the private education corporation.  Believe me, if they are in charge of the schools, it is even less likely that our citizens will be able to apply the lessons of history when casting their votes.

Krugman is Right Again

As usual.

Another Muslim Plot to Take Over America

Hilarious.

Changes on the Horizon

This is the latest article I have read which indicates that changes are on their way in Obama's White House.

In some ways this is good, but I find this sentence ominous:

Another senior strategist who participated in a meeting with Mr. Axelrod said the White House hadn't grasped the economic concerns voters have— something he says Republicans seemed to understand.

Why is this ominous?  Because I am afraid that they will address voters' economic concerns by adopting Republican economic policies, which so clearly got us into this mess to begin with.

I am beginning to think that the Democratic Party made a gigantic mistake by running Obama in 2008.  This is not because of him, but because of what he represents for the opposition - a rallying cry against the inevitable change that is coming to this country.  Of course, party leaders probably did not foresee in the spring of 2008 the gigantic economic disaster that would come in the fall (when the banking crisis really came to the attention of the country).  But there was no way that Obama would be given the wiggle room to do what actually needed to be done in the face of that crisis.

The country took a huge cultural turn in 2008 by electing Obama.  I just don't think that the country was ready or willing to take the huge policy turn that was urgently needed at that time.  I mean, come on, do you really think that a staunch democrat with national heft like a Ted Kennedy would have been beholden to the corporate banking powers whose chokehold on economic policy has been undiminished under Obama.  Do you really think he would have seen Dick Rubin, Larry Summers and Tim Geitner - people who played key roles in getting us into this mess - as the people who should get us out of it?

Of course, it goes without saying that Hillary Clinton wouldn't have done any better.  After all, Rubin, Summers et al. earned their stripes in her husband's administration.  My main reason for supporting Obama over Clinton was the recognition that the Clinton administration contributed to the dismantling of the policies that resulted in the economic crisis.  She would have been even more beholden to these people than Obama was.

It's kind of sad that when I write this the only Democrat I can think of that had the heft and the smarts to do what was necessary was Kennedy.  There really are no liberals left on the national radar since he passed away.

More Evidence of God's Grace

Just following up on my post yesterday, from the People's Blog for the Constitution.:

According to law professor Marjorie Cohn, last month’s release of nearly a half a million secret government records by Wikileaks

contain startling evidence of more than 1,300 incidents of torture, rape, abuse and murder by Iraqi security forces while the U.S. government looked the other way. 

Still think we are strong and powerful because God is on our side?

Assessment

Being on my local Board of Education, I found the following post very telling:

November 1, 2010

Buzzwords: Profaning the kool-aid god?

By Thoreau

So, “assessment” is a buzzword in academia, and probably in other areas of endeavor as well.  At the core, there’s little that’s objectionable to periodically taking a deeper look below the surface of what you’re doing, and seeing if it actually does what you think it does.  Of course, taking a deeper look is not always easy, it requires some thought and reflection, and making it into an obligatory and constant bureaucratic exercise is not a good way to generate useful and thoughtful efforts.

Going beyond the reasonable notion that you should periodically take a deeper look at what you’re doing, pedagogical reformers of many sorts get convert zeal and treat assessment as a moral imperative.  But, when a religion has enough zealous adherents, it might suddenly become mainstream.  And when it goes mainstream, it goes from being pure to being mass market lowest common denominator oversaturation.  The word “assessment” is no longer just confined to careful examinations of how well something is working.  It isn’t even just applied to a bureaucratic ritual of report-writing focused on the curriculum.  It’s applied to every piece of paper, every report, every bit of data, any and every piece of bureaucracy and hoop-jumping and report-generating.  The odds are good that a time sheet will soon be marked “Hours assessment” and an account statement will be marked “Fiscal assessment.”

So, at lunch the other day a colleague who has drunk deeply of the kool-aid remarked on how much he hated having to write a friggin’ report over some small piece of triviality.  And I said to him “Oh, I thought you’d be a big fan of assessment?”  (He and I get along well enough that I can good-naturedly chide him for drinking the kool-aid and he can chide me for not drinking it.  Or maybe he’s just pretending to enjoy our banter while he works on converting me.)  And then he reminded me that there’s Real Assessment (done by True Scotsmen, I imagine) and all of the bullshit that they make us do.

And so I had a new insight into buzzwords and kool-aid:  While some kool-aid drinkers might exult when the bureaucracy embraces their cause and turns it into a buzzword that we must all pay homage to, those who hold it sacred view their idol as having been profaned.  And so I actually gained a bit of respect for some of the kool-aid drinkers.  Say what  you will about the tenets of assessment, dude.  At least it’s an ethos.

Of course, I tend to lean toward's Atrios' view of this:

My understanding is that the popularity of "assessment" in higher education is based on the notion that other people suck and I would like some way to prove that, one which, preferably, would not inconvenience me or demonstrate that I, too, suck. 

I Remember Too

My only question is why wasn't nationally televised into every home last night.

So True

see more Political Pictures

Now I Know Why I Don't Watch TV News

Good God

As an experiment, I just spent the last hour watching CNN Headline News.  I wanted to see how much time they spend on various stories.  Here is my summary of the 60 minutes:

Commercials                                                  17:30

Cargo Terror Incident                                      5:15

Negligence lawsuit against 4-year olds            5:00

Calif. Law Against Violent Video Games       4:30

Local Story – Early Retirement Scams            4:30

Jim Leyritz Trial                                              3:45

Gonzalez Murder Trial in Florida                    2:45

Bret Favre                                                        2:45

Teasers                                                             2:30

Elizabeth Smart Case                                       1:45

“Off the Beaten Path”                                      1:45

Clark Howard Advice – Car Service               1:30

Election – only about the CNN poll results      1:00

Parents leaving kids in casino parking lot         1:00

Secret Webcam Incident                                   0:45

Arizona Immigration Law                                0:30

Airbag Malfunction                                          0:50

Randy Quaid                                                    0:40

Alcohol v. Cocaine                                           0:40

Space Shuttle Launch                                       0:20

Steam line explosion in Utah                            0:20

Indonesia Volcano                                            0:20

Now remember:  Tomorrow there is an election that everybody thinks is extremely important in terms of what the future direction of the country will be.  Headline News spent a total of 1 minute - 30 seconds during each half hour - on stories related to the election.  And in both 30 second spots, all they did was reported on the latest CNN poll that says 51% of voters think Republicans will take over Congress, and that President Obama's approval rating is 45%.  That's it!  

Unbelievable.

On God's Side

During this election campaign I have been on Rep. Alan Grayson's mailing list and have received a number of interesting emails from him.  Today's email reminded me of a favorite quote from Lincoln: "Don't pray that God is on our side; pray that we are on his side."

I have been thinking about whether God is on America's side over the past few weeks.  I think that most American Christians would say yes He is.  But I read Matthew 19:23-24 and the Sermon on the Mount and wonder how anyone can think that.  The fact that we have become the richest and most powerful country on Earth is not a sign that we have God's grace - it's a sign that we're losing it.

Letter from the Prez

I signed up with Organizing for America, the successor to Barack Obama's website after he became president, and have received several emails a day from them ever since.  Today I received the following, which supposedly comes from the President himself (I edited out things like who he wants me to vote for and where my polling place is):

Sean --

Tomorrow, you can help determine not just the outcome of this election, but our country's future.

You made the difference in 2008. Now, once again, you can defy the conventional wisdom that says you can't overcome the cynicism of our politics; you can't overcome the special interests and the big money; you can't tackle our biggest challenges.

This movement has never backed down from a tough fight -- and we're not about to start.

Sean, we've got to keep moving America forward -- but I need allies in the House, the Senate, and governing states to make it happen. The ballot you cast in 2008 was a crucial first step. Thank you for that.

I need you to make sure you get at least three of your friends to vote with you -- it is simply the most important thing you can do to make sure we can keep bringing about change.

When we arrived in Washington, we knew the road ahead would be difficult.

Our country was facing the worst economic downturn since the Great Depression -- with 8 million jobs gone -- because of nearly a decade of policies that put corporations and special interests before ordinary Americans.

Two short years later -- together -- we have begun to rebuild our economy on the values of hard work and responsibility.

Private employers and small businesses have created jobs nine months in a row. And 3 million Americans would not be working today if not for the investments that you, and our Democratic allies in Congress, helped put in place.

Because of you, there are families all across the country who will never have to choose between losing their home and treating an illness. Because of you, millions of parents can look at their kids and know the opportunity of a college education is within reach. Because of you, a business owner got a small business loan and is keeping her doors open. And because of you, thousands of our brave men and women are home from fighting in Iraq.

I know that even with these changes -- and the progress you've fought for -- too many families are still struggling. We have so much more to do.

And that's exactly why America cannot afford to go back.

We must continue to move forward, and the decisions voters make in your area will determine which direction this country takes for generations.

We want to keep taxes low for the middle class, so you can pay your bills.

We want to give tax breaks to American companies who create jobs and spur innovation right here in America, not make it easier for them to ship jobs overseas.

We will fight efforts to privatize Social Security, and stop the other side from handing over the retirement savings of a generation to Wall Street.

We refuse to go back to the days when big oil and insurance companies wrote their own rules and ran up record profits, while you paid for it at the pump or faced bankruptcy as health bills piled up.

The other side has different ideas.

Washington Republicans have tried to block our progress at every turn. And worse, they're campaigning on taking us back to the exact same agenda that brought us to the brink of disaster: Cut taxes for the wealthy at the expense of the middle class while ballooning the deficit. Give free rein to Wall Street speculators. Lower the minimum wage for millions of hard-working families. Privatize Social Security. And allow insurance companies to deny children health coverage based on pre-existing conditions.

The problem is we know what this looks like -- and we know it doesn't work.

We cannot relive that past.

Don't let them tell you that change isn't possible. Because here's what I know: Nothing in America has ever been easy.

The only reason we're here is because, in past generations, Americans came together, even in the face of impossible odds. That's how we got through war. That's how we got through depression. That's why we have civil rights, and women's rights, and workers' rights.

We've asked you to do so much since we started this journey together, and you've always come through.

And now, I'm asking you to come together once more to cast your vote for Democrats tomorrow.

With your vote -- and the votes of at least three of your friends -- we'll continue to grow this economy and restore the middle class to its rightful place, and the American Dream will be alive and well once again.

Thank you for all you do,

President Barack Obama

P.S. -- There are vital get-out-the-vote events happening across the country today and tomorrow. If you aren't already signed up to help, please find and RSVP for a GOTV event near you.

I must say I look at this and I am very sad, because while I agree it is imperative that we not go back to the policies of the Republicans that got us into this mess to begin with, I am extremely cynical about a lot of what he says here.  Here are a few points:

Because of you, there are families all across the country who will never have to choose between losing their home and treating an illness. 

The "there are families" phrase is cute - because there are families that will continue to have to make this choice even with the health care reform that was passed.  Further, there are millions of families that will lose there homes due to other reasons - loss of a job for example - and there are millions of families that continue to pay there mortgages on homes that are underwater.  And the administration has done very little to help them out.

We want to give tax breaks to American companies who create jobs and spur innovation right here in America, not make it easier for them to ship jobs overseas.

Actually, I think most Americans know that this is a stupid policy.  Our largest corporations are sitting on piles of cash that they are refusing to invest - and we want to give them more money?  It's time to stop using carrots and start using sticks.

We will fight efforts to privatize Social Security, and stop the other side from handing over the retirement savings of a generation to Wall Street. 

If the President hadn't created a "Deficit Commission" stacked with people who want to "reform" social security, I would believe this.  But he did, and I don't.

We refuse to go back to the days when big oil and insurance companies wrote their own rules and ran up record profits, while you paid for it at the pump or faced bankruptcy as health bills piled up.

If the President hadn't negotiated away the public health insurance option with the insurance companies before a bill was even introduced, I would believe this.  If the President hadn't lifted the limitations on offshore drilling even while oil was still gushing into the Gulf of Mexico, I would believe this.  But the fact of the matter is he did these things.  These "bad old days" haven't stopped under this administration.

The only reason we're here is because, in past generations, Americans came together, even in the face of impossible odds. That's how we got through war. That's how we got through depression. That's why we have civil rights, and women's rights, and workers' rights.

As far as civil rights are concerned, the National Security Surveillance state continues to grow under President Obama.  And the reversals in the fields of civil rights, women's rights and worker's rights have at best been slowed - but they continue to decline.

I intend to vote tomorrow, and I intend to vote Democratic.  And I don't know of anyone that does not intend to vote tomorrow.  But it is still the lesser of two evils to me.  President Obama has done little if anything to stem the decline of the United States of America, probably because he fails to see that a decline has occurred at all.

Happy Halloween everyone!

Apropos Indeed

A great historical find by Digby.

And, as always, she is right about this - it is hideous.

Government, Democracy, Capitalism and Free Markets, Part 1

I have been thinking a lot over the last several weeks about trying to put in words my own thoughts about freedom, democracy, capitalism, free markets, etc., trying to see if I can lay out a comprehensive framework of what I believe in terms political and economic philosophy.   This is the first of what will likely be a number of posts musing on these topics.

One thing I am struck by when observing political reporting and political advertising in the last several months is how there is a perception among most Americans that the government is fundamentally the only thing out there that can reduce or eliminate a person's freedom.  There seems to me no concept that private individuals can do as much or more to eliminate a person's freedom as the government can.  Yes, certainly a tyrannical government is not something anyone wants, but it should always be remembered that the main reason government exists is to prevent individuals from harming one another - from reducing their freedom, either by killing or injuring them, taking their property away, etc.

The worst loss of freedom a person can suffer is to become a slave - which is at its heart one person having total control over another. The government really has nothing to do with this - it is a private act to enslave another person.

But this is just an extreme.  There are enumerable other ways that one person can take away another's freedom.  And unless we are going to have a society characterized by chaos, the only way to prevent this is to have a government that intervenes to prevent one person from harming another.

Once we can all agree on this basic concept, in many ways is just a matter of degree as to what kind of powers the government should have.  We can all agree on some basic things - that people should not be able to kill or injure each other, or rob each other, or enslave each other.  The government ought to have the power to stop these things when it can, and to punish people who do these things when it fails to stop them.  From here on it's just a manner of defining what it is we want to prevent, and decide how we want to prevent them.

Hilarious

This is one of the funniest pictures I've seen in a long time:

You mean capitalism didn't cause those miners to be trapped to begin with?  What a moron.

BTW, this is a picture of a supporter of Daniel Webster, a tea party Republican seeking to unseat progressive Democrat Alan Grayson of Florida.

h/t Digby

Most People Just Don't Understand How Common This Is

This post from Angry Bear describes a trend that is getting worse and worse.

There are basically two ways to prevent corporations from breaking the law.  One is through government regulation and oversight, and the other is by having private citizens sue.  Over the course of the last decade, regulation is becoming virtually non-existent, as our elected leaders have allowed corporations to essentially capture the agencies that are supposed to regulate them (witness the Gulf of Mexico oil disaster earlier this year).  The second is now being foreclosed by the courts, who are effectively requiring plaintiffs to prove their case before they are allowed to file a lawsuit - which is exactly backwards, since you can't get the evidence needed to prove your case until after the suit is filed.

Legislation is useless.  If the law cannot be enforced, it may as well not be there.  And if corporations are not required to act legally, there is no such thing as a free market.

The sad thing is that this is the kind of event with 99.9% of Americans aren't even aware of.  Our corporate media sees to that.  Yet it affects our rights so much more intimately than a muslim community center being built two blocks from the WTC.

Another nail in the coffin of democracy in America.

In Memoriam

My father passed away on Saturday.  Here is the text of the obituary that appeared in the San Diego Union Tribune on Wednesday:

MITTS, JOSEPH PATRICK March 13, 1932 to Oct. 23, 2010 CDR Joseph Patrick Mitts, USN (Ret) of Mira Mesa died on October 23, 2010, at Scripps Memorial Hospital in La Jolla. His loving family was by his side. Born in Great Falls, MT, on March 13, 1932, Commander Mitts attended schools in Montana, California and Wyoming. He enlisted in the Navy in 1949 from Casper, WY. Commander Mitts was commissioned as a "mustang" Supply Corps officer in 1956. His 25-year naval career included service during the Korean conflict, and two tours in the Vietnam War. He was awarded the Korean Presidential Unit Citation, China Service Medal, United Nations Service Medal, and the Vietnam Service Medal with two stars. Following retirement in 1975, Joseph and his family moved to Rancho Bernardo. He was employed as assistant purchaser for San Diego County while working toward his bachelors and law degrees. He practiced law in the San Diego area, and received an award from the San Diego Bar Assn. for work done on behalf of clients of incapacitated and disabled attorneys. Joseph loved his family, his children and grandchildren, and his dogs. He especially loved the sea and time in the service of his country. He married Roberta Hope Mitts in 1984. He also is survived by his sister Sandra Yoffie of San Rafael, CA; his daughter Kathleen Coles of Pittsfield, MA; his sons and their spouses: Joseph (Pat) and Kathy Mitts of Las Vegas, NV; Sean and Lorraine Mitts of Brewster, NY; and Kevin and Marybeth Mitts of Lenox, MA; two stepsons, Isreal Nahsohn of Napa, CA, and Adi Nahsohn of Temecula, CA; eight grandchildren, Brooke Nahsohn of San Diego, Corey Mitts of Las Vegas, Connor and Kyle Mitts of Brewster, NY, Alex and Jacob Coles of Pittsfield, MA, and Margaret, Elizabeth and Katherine Mitts of Lenox, MA. Three step-grandchildren and nine nieces and nephews also survive. He was predeceased by his brother, Michael Francis Mitts of Kalamazoo, MI. A U.S. Navy Burial at sea will be scheduled. In lieu of flowers, the family asks that donations in his honor be made to the Navy-Marines Corps Relief Society of San Diego, PO Box 8103, San Diego, CA 92136-8103.

My father and I had a lot of disagreements, and some extended periods of estrangement, but I was always very proud of his service to our country.  He instilled in me a sense of public service that I treasure in myself.  I am very happy that I had the chance to see him before he passed last weekend.  

Impeachment

Once again, Scalia and Thomas show themselves for the scum they are.

There is no place for people like this on our Supreme Court.

You know, we can impeach judges too.  This seems such a clear violation of what judges are all about that it should be seriously considered.

Of course, the spineless Democratic leadership will never even consider it.

The Joe Miller Incident

I haven't been commenting on this since it seems to be something everyone is talking about.  But I agree with Digby - this is very disturbing.  If the Army does nothing about this then there should be a huge uproar.

I particularly like 23skidoo's comment on Glenn's post:  "I guess Sarah Palin was right - you CAN see Russia from Alaska."

Privatization Part 2

Although, in this case, the "private service provider"was a neighboring government.

And I have personal experience with this sort of thing, though for prudence sake I won't go into it....

Well, at least they're not airing it.

But they had to be urged not to?

Robert Reich

He says it so much better than I can.

Outsourcing

When people think of outsourcing, they think of US companies using companies in India to reduce costs.  But there is a more invidious kind of outsourcing - having our government outsource basic governmental functions to private enterprise.  Among the first functions to be outsource in the US was incarceration of prisoners - private prison companies have been around for quite some time.  And this is the kind of thing that happens when we allow this sort of thing.

On the national security side, once we started contracting for huge weapons systems and private mercenary companies, it was only a matter of time before we had to start manufacturing wars to keep their profits up.

What to do

Digby asks what are we going to do about the flood of corporate money taking over our politics.

I suggest a Constitutional Amendment.  The language would be fairly simple:

The rights enumerated in this constitution shall apply only to human beings and shall not be applicable to any legal entity, whether or not incorporated.

For good measure, I might add the following:

Any legal entity whose existence is reflected in the issuance of a certificate by the government of the United States or any State shall be treated as a department or subdivision of that government for all purposes of this Constitution.

This would make it clear that it is illegal for corporations to violate the constitutional rights of any individual.

I think these changes would go a long way toward restoring sanity to our democracy.

Appalling

This is why our country is going to hell in a handbasket.  All of our elites - Democrat and Republican - are drinking the same kool-aid.

I was once a big fan of Bill Bradley.  What happened to him?

Move Along

Nothing important going on here....

What the Future Holds

Avedon links to this article which I think lays out our current dilemma perfectly.

I agree with commenter JRB - need to think about this awhile before I add my two cents worth.

Banksters

This is what happens when we privatize tax collections.

It's the Sixties All Over Again

This does not surprise me.  Somehow peace activists are viewed as dangers, while mercenary companies are viewed as good things.

I kind of thought that this sort of thing as would be commonplace when it was revealed that the NSA was collecting every single email sent in the United States.

I've also noticed a dangerous trend toward entrapment in terrorism cases.  Here is an article about the terrorism trial going on in Newburgh, NY.  There hasn't been an arrest yet in a foiled terrorism plot in the US where an FBI informant was not in on the plot from the very beginning.

We have created such a monster of an anti-terrorism system in this country.  Reference this Washington Post article of several months ago.  It was inevitable that they would do things like this - they need to justify their existence.  Anything that the powers that be now consider a threat is suspect.

What Glenn Said

Brilliant, as usual.

More on the Foreclosure Crises

Ezra Klein asks a great question.

And, as usual, Atrios supplies an answer which, of course, is spot on.

Be prepared - it's going to get ugly.

Funny But Sad Too

Sometimes the shenanigans that go on the preserve the corrupt system now in place are really unbelievable.

Only the Big Corporations Are Recovering

Now there is some data to prove it.

This is no big surprise - it's why the stock market continues to rise while the rest of the economy languishes.

The real question is - why isn't there anyone in the media talking about this?  And of course, the answer is simple - the media is dominated by big corporations.

The Return of the Know-Nothings

God help us.

Pat Sajak - Political Pundit?

To be honest, I never knew that Pat Sajak was an ultra conservative - not that I pay attention to the political views of entertainment celebrities to begin with (actually, I don't pay attention to their personal lives at all - but that's a discussion for another day.

I also didn't know that Pat Sajak was so stupid.

Live and learn.

Big New Problems for the Banks

Felix Salmon, a columnist/blogger for Reuters, has an interesting - and in my view scary - explanation of what is going on with this mortgage mess.  I love Atrios' succinct analysis of the Salmon article:  "Shorter Felix Salmon:  Big Shitpile is shittier than any of us ever imagined."

The corruption in this whole process is incredible.

Now we know the following:

1. Mortgage bankers were using the hard sell to get consumers with edgy credit to enter into loans they clearly could not afford.
2. Banks purchasing pools of mortgages originated by these mortgage bankers were aware that a very large percentage of the loans being purchased were of very low quality - i.e., failed to meet the banks' underwriting standards, and so negotiated steep discounts when they were purchased from the originators.  But when they sold these pools to issuers of mortgage-backed securities, they failed to discloses this and didn't pass along the discounts.
3. Needless to say, the rating agencies vastly overrated the quality of the mortgages underlying the mortgage backed securities - in some cases issuing AAA ratings for stuff that should have been rated as junk.  Documentation shows that they did this because their clients wanted them to, and they wanted to keep their clients (and the high fees they paid).
4. When the mortgages were sold to the issuers of the mortgage-backed securities, the parties actually failed to complete the documents transferring title of the mortgages to the issuers.
5. And now many states have imposed moratoriums on foreclosures since it has become known that the banks are engaging in the widespread practice of falsifying documentation filed in the foreclosure cases.

A few additional points.  First, it seems fairly clear that we are about to have another huge jolt to the financial system as a result of all of this.  Believe me, people are going to be suing each other all over the place.

Now I know why we need tort reform - we need to clear the courts so that our biggest corporations and richest investors can wage legal war against each other.

And if my reading of all this is correct, I'm pretty sure the banks are going to bear the bulk of the losses resulting from all of this.  So get ready for another bailout.

And finally, can someone please explain to me again why no one has gone to jail over this?

Viral Emails

These kinds of things really bother me.

Yesterday out of the blue I received an email about illegal immigration.  I quote it in its entirety:

LET ME SEE IF I GOT THIS RIGHT:

IF YOU CROSS THE NORTH KOREAN BORDER ILLEGALLY YOU GET 12 YEARS HARD LABOR.

IF YOU CROSS THE IRANIAN BORDER ILLEGALLY YOU ARE DETAINED INDEFINITELY.

IF YOU CROSS THE AFGHAN BORDER ILLEGALLY, YOU GET SHOT.

IF YOU CROSS THE SAUDI ARABIAN BORDER ILLEGALLY YOU WILL BE JAILED.

IF YOU CROSS THE CHINESE BORDER ILLEGALLY YOU MAY NEVER BE HEARD FROM AGAIN.

IF YOU CROSS THE VENEZUELAN BORDER ILLEGALLY YOU WILL BE BRANDED A SPY AND YOUR FATE WILL BE SEALED.

IF YOU CROSS THE CUBAN BORDER ILLEGALLY YOU WILL BE THROWN INTO POLITICAL PRISON TO ROT.

IF YOU CROSS THE US. BORDER ILLEGALLY YOU GET:

* A JOB,
* A DRIVERS LICENSE,
* SOCIAL SECURITY CARD,
* WELFARE,
* FOOD STAMPS,
* CREDIT CARDS,
* SUBSIDIZED RENT OR A LOAN TO BUY A HOUSE,
* FREE EDUCATION,
* FREE HEALTH CARE,
* A LOBBYIST IN WASHINGTON
* BILLIONS OF DOLLARS WORTH OF PUBLIC DOCUMENTS PRINTED IN YOUR LANGUAGE
* THE RIGHT TO CARRY YOUR COUNTRYS FLAG WHILE YOU PROTEST THAT YOU DONT GET ENOUGH RESPECT
* AND, IN MANY INSTANCES, YOU CAN VOTE.
*

I JUST WANTED TO MAKE SURE I HAD A FIRM GRASP ON THE SITUATION

Most of these emails I just toss aside, but for some reason I couldn't do it this time.  This is my response.

Sorry, but I find these kinds of messages very annoying.

First of all, are you telling me that the United States should look at North Korea, Iran, Afghanistan, Saudi Arabia, China, Venezuela and Cuba as role models?  Are you really saying that because they treat foreigners like crap that its ok that we do too?  Aren't we supposed to be better than these countries?

Second, so much of what's in here is false or at least misleading:

* A JOB - Yes, but only because employers want cheap labor.  They would rather have the profits from cheap labor than hire American citizens.
* A DRIVERS LICENSE, - Only in a couple of states.  Certainly not in New York.
* SOCIAL SECURITY CARD - Yes, a fake one, so they can pay social security taxes but will never get the social security benefits.  That's a good thing for them?  None of them have real social security cards - this is is right wing lie.
* WELFARE, - No - this is a right wing lie.
* FOOD STAMPS - No - this is a right wing lie.
* CREDIT CARDS - Yes, but again, only because corporate America wants to get 20% or more in interest from them.  Certainly this is not a government benefit.
* SUBSIDIZED RENT OR A LOAN TO BUY A HOUSE, - They don't get government housing subsidies - this is a right wing lie.
* FREE EDUCATION - Yes, but only the children, not the adults.  What, do you punish the children for the actions of the adults?
* FREE HEALTH CARE - only if you consider access to emergency rooms "health care"
* A LOBBYIST IN WASHINGTON - You mean the Chamber of Commerce?  They're the ones that Congress listens to, and they're the ones that are lobbying against any changes because they want the cheap labor.
* BILLIONS OF DOLLARS WORTH OF PUBLIC DOCUMENTS PRINTED IN YOUR LANGUAGE - You know, there are American citizens for whom spanish is their native language.  People seem to forget that 30% of our nation was conquered from Mexico and has a lot of native spanish speakers.  Just like people seem to forget that Puerto Ricans are Americans too.

* THE RIGHT TO CARRY YOUR COUNTRYS FLAG WHILE YOU PROTEST THAT YOU DONT GET ENOUGH RESPECT - Which is worse - carrying the flag of Mexico or carrying the Confederate Flag?  At least these people didn't commit treason against the United States.
* AND, IN MANY INSTANCES, YOU CAN VOTE - Absolutely not.  There is no evidence that illegal aliens vote anywhere in the United States.  This is another right wing lie.

Look, I'm as unhappy about the situation as anyone.  I know that the presence of these immigrants in the United States is one of the ways that the middle class is being screwed in this country.  But it is only one of the ways, and the immigrants themselves are only partly to blame for this.  And it doesn't do any good to spread a lot of lies about what is really happening.    

The real reason this is happening is because the powers that be like it this way.  Getting cheap labor from abroad - like shipping jobs overseas - only accomplishes one thing - screws the vast majority of Americans and enriches the elites.

That is really where people's anger should be focused.

Needless to say, the sender is no longer on my friends list.