Month: February 2010

“The CEOs and directors of the failed companies, however, have largely gone unscathed. Their fortunes may have been diminished by the disasters they oversaw, but they still live in grand style.

“It is the behavior of these CEOs and directors that needs to be changed.”

Warren Buffett seeks oversight and penalties for those in charge.

“If their institutions and the country are harmed by their recklessness, they should pay a heavy price — one not reimbursable by the companies they’ve damaged nor by insurance.

CEOs and, in many cases, directors have long benefited from oversized financial carrots; some meaningful sticks now need to be part of their employment picture as well.”

Rebecca Solnit:

Our supposedly capitalist society is seething with anticapitalist energy, affection and joy, which is why most of us have survived the official bleakness. In other words, that’s not all there is to our system. Our society is more than and other than capitalist in a lot of ways.

Resistance to the status quo can be a pleasure and an adventure.

Don’t bow down. To capital. Or to cliché or oversimplification or defeatism. Try rising up instead. It’s more interesting.

The real Adam Smith did not believe in a magically benevolent market which operates for the benefit of all without checks and balances.

Capitalism has to grow up, become less naive, rely less on a blind faith in ‘the invisible hand’ and rely more on an understanding of human nature.

Quoted endlessly by Republicans as their granddaddy of unfettered markets, here’s what Adam Smith actually said:

“When the regulation, therefore, is in support of the workman, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.”

As Republicans stump spending cuts and since Bush took office January 2001, the nation hurts.

There’s $2.6 trillion in spending not paid for, more than $2.0 trillion in tax cuts. The new House PAYGO rule, effective immediately, stalls or stops any bill that would increase deficits.

Streamlining Accomplished.

The government willfully under-regulated both Toyota and Goldman for the sake of the race to the bottom — the never-ending quest for more profits — regardless of the dangers posed to taxpayers whether those hazards be derivatives or cars that accelerate for no apparent reason.

Hijacked

“The root cause of their problems is that the company was hijacked, some years ago, by anti-(Toyoda) family, financially oriented pirates,” said Jim Press, Toyota’s former U.S. chief and only American to hold a seat on the company’s board.

A recent survey by the California Association of Realtors has shown that 67% of California home sellers who sold last year could not pay their mortgages. That’s enormous.

Bush tax cuts cost $1.8 trillion, twice the bill for health reform. What did we learn?

“If we don’t do it, you know this whole city is going to go down. I’m hopeful people will understand that,” Detroit Mayor Bing said. “If we can incentivize some of those folks that are in those desolate areas, they can get a better situation. If they stay where they are I absolutely cannot give them all the services they require.”

The key components of the American School directly confront, deny and refute the economic imperialism championed then by England and imposed by means mostly foul upon Europe over the years.

Economics Populist:

Most Americans aren’t aware that America once had a national economic plan, and it existed from the days of President Lincoln to President Nixon in one form or another.

During that 112 year period America grew from an agrarian frontier nation to the most mighty economic power the world had ever seen.

Obviously there had to be something good in that economic plan.

The roots of the American School of Economics go back to Alexander Hamilton, Friedrich List, and Henry Clay of the Whig Party. The American School of Economics was far different from the dominant economic thought of today.

Through this economic philosophy America set the standard in manufacturing, higher education, scientific research and development, finance, and general standard of living.

So what happened?

From the Economist:

What has disturbed me is the resistance of some within the financial sector to innovations which would improve the ability of the financial sector to perform its core functions.

For instance, modern technology allows the creation of an efficient electronics payments mechanism, where the transfer of funds, say, from a customer’s account to the retailer’s would cost at most pennies. Yet in most countries, the fees can be orders of magnitude greater.

As a member of President Clinton’s Council of Economic Advisers, I saw the resistance to the introduction of inflation-indexed bonds that protect individuals’ savings for their retirement from the uncertainties of inflation decades later. The financial sector’s complaint was that individuals just bought and held these securities; for the retirees, who wanted to minimize transactions costs, that was good; for the financial sector, that wanted to maximize transactions costs, it was not.

There are mortgage products (such as those prevalent in Denmark) which would have helped ordinary families manage the risk associated with their most important asset, their home. But in few countries have they been introduced; in many countries, the financial sector has resisted their introduction.

Feb. 23 (Bloomberg)

Former Federal Reserve Chairman Alan Greenspan said the financial crisis was “by far” the worst in history and called the recovery from the global recession “extremely unbalanced.”

“…by far the greatest financial crisis globally ever…”

The economy in far worse shape than the Great Depression… caused by “fundamental misjudgment in the marketplace”… more harmful than the 1930s… “extremely unbalanced recovery” and only for high-income consumers and large businesses benefiting from a recovery in stock prices…

Meanwhile, bonuses on Wall Street rose 17% while 24% of homes are upside down.

Hospital Finance News.

Hospital-acquired infections kill up to 99,000 people each year, plus cost an extra $33,000 to treat per person, reports the largest national study to date – 69 million discharge records from hospitals in 40 states. Fatal car accidents kill 39,000, much fewer than hospital acquired sepsis and pneumonia.

Public option? Free market?

Where’s our Ralph Nader of greed and sloppy?

The first thing we must acknowledge is that we have just witnessed one of the most massive transfers of wealth, from the poor to the rich, in mankind’s history.

This enormous theft now threatens the very existence of the middle class in America.

Economic Populist:

Economics today is not merely a science without a purpose. Economics, as the professions now exists, is to science what Fox News is to the news media. Just like the purpose of Fox News is to misinform the public, the purpose of economics today is a PR con to justify inefficient and immoral policies that defend the status quo and keep mankind from advancing.

Free market or fee market? Big banks charged more for almost every fee imaginable.

Overdraft fees were 41 percent higher at big banks compared to small; 43 percent more for bounced checks, 57 percent more for stop-payment orders, and 18 percent more for ATM withdrawals.

At the urging of then Fed chairman Alan Greenspan, Congress ordered the Federal Reserve to stop publishing its annual report on bank fees. . . .

More details from Stacy Mitchell of the New Rules Project.

Paul Krugman:

At this point, then, Republicans insist that the deficit must be eliminated, but they’re not willing either to raise taxes or to support cuts in any major government programs.

And they’re not willing to participate in serious bipartisan discussions, either, because that might force them to explain their plan — and there isn’t any plan, except to regain power.

But there is a kind of logic to the current Republican position: in effect, the party is doubling down on starve-the-beast.

Depriving the government of revenue, it turns out, wasn’t enough to push politicians into dismantling the welfare state. So now the de facto strategy is to oppose any responsible action until we are in the midst of a fiscal catastrophe.

You read it here first.