Bernanke’s award as Time’s Man of the Year

Time Magazine honors Federal Reserve Chairman Ben Bernanke as their "Person of the Year." Is the honor deserved? No, says the Washington Posts Binyam Applebaum and David Cho. Treasury official and current FDIC Chair Sheila Bair noticed serious problems as early as 2001 and tried to get subprime lenders to adopt a code of best practices, Freddie Mac stopped purchasing certain securities in 2002, the Greenlining Institute warned in 2004 that lenders were being unscrupulous and Federal Reserve Board Governor Edward Gramlich warned in 2005 that lending practices were unsatisfactory.

Did Bernanke do anything in response to these warnings? No. Bernanke sat around, twiddling his thumbs and complaining that people had been warning of disaster since 1979. Bernanke does not deserve a second term and should not be re-appointed to one.

Keep in mind that, because of Bernanke's dereliction of duty in allowing the housing bubble to continue as long as it did, the US lost $6 trillion in housing wealth, which has cost the US $500 billion in annual income.

Bernanke failed to see the bubble in the first place. He felt that the Fed should not concern itself with asset bubbles, or call the attention of financial markets or the public to these bubbles by using its regulatory power to rein in lending, or explicitly using interest rates to target a bubble.

Also,

The Fed has directly lent more than $2 trillion to financial and non-financial institutions in the last two years. It has guaranteed trillions more.

The US needs to audit the Fed and to restrict it from its far-too-independent role.

Leaving the base behind

President Obama is just going way too far afield, making way too many concessions to right-wingers in the Democratic Party Caucus.

And speaking of going too far afield and leaving folks behind, Rush Limbaugh is convinced that America was  prosperous under Reagan and both the elder Bush and the younger Bush! Actually, income inequality took a serious jump upwards in the mid-1980s and got even worse under the younger Bush and when one asks the "Reagan Question," i.e., "Are you better off now than you were [before this last guy took office]?" The answer for the younger Bush is a resounding NO!

The urgent priorities

With the recession coming to an end, Democrats need to get their priorities in order. As I've stated over and over already, deficit reduction has to take last place. The deficit hawks need to siddown and shuddup. The nation desperately needs a large-scale jobs program and it needs one now!!! Will such a program make a serious difference in the unemployment rate by next November? Probably not, but if the public doesn't get the impression that the Democrats are putting a 110% effort into job creation, that could leave a political opening for the teabagging right wingers to make gains at the expense of Democrats. That would truly be a tragedy!

As to the idea that Obama could take money from TARP (Unspent money plus money paid back equals a large bucket of available cash) for job creation. Would it help? Eh, six of one, half-dozen of the other.  Go ahead and do it if it's politically easier, but money is money.

Recession appears to be coming to an end

Thankfully, the employment graph for the "Great Recession" appears to be at last curving upward!!! Do we owe the Republican Party any thanks whatsoever? No.

According to Digby:

And in the meantime you have the deficit fetishists taking the opportunity to pimp debt as the cause of the economic crisis and shock doctrine their way into the destruction of entitlements. They are doing that by conflating the short term need for stimulus etc with the Wall Street bailouts and the deficit. And now they think that those are the things that caused the recession. Now, whether the Democratic congress will allow the deficit scolds to push through a cat food commission is unknown, although there's plenty of reason to believe that the political establishment sees this as a "go to China" moment that needs to be done under a Democratic president.

Couple of good questions about taxes and who should pay them.

People are getting wa-a-ay too excitable about deficit

Look, $1.4 trillion is a lot of money, but it's still, as a percentage of GDP, far short of US deficit spending in World War II.  President Obama inherited this problem, caused by the last president initiating "tax cuts during a time of war and a floundering economy."

Previewing the next fight

NY Times economics columnist Paul Krugman looks at how Republicans intend to fight climate change legislation. Essentially, they'll lie like there just ain't no tomorrow. The cost of combating climate change by 2050 is projected to barely make a discernible dent in economic growth, but the right wing is going to be attempting to convince the American people that fighting climate change will bankrupt the country.

Is there cause for concern? Ehh, to some extent yes, but note the impact of right-wingers yelling and screaming at town halls all summer.

"Nationally," the memo reads, "voters oppose a mandate to purchase private insurance by 64% to 34% but support a mandate with a choice of private or public insurance by 60% to 37%." (Emphasis added)

also,

"Most Americans trust Mr. Obama more than Republicans to make the right decisions on the issue; 76 percent said Republicans had not even laid out a clear health care plan."

As, of course, Republicans have not "laid out [any sort of a] clear health care plan," it does make one wonder about the people who say Republicans have done so. But anyway, Republicans not only failed to move the needle their way, it went the other way! It went towards the Democrats.

The verdict is in

The younger Bush's two terms, economically characterized by two massive tax cuts in 2001 and 2003, were a complete, absolute and unmitigated failure. Every single important category of economic well-being saw a decline. When Bill Clinton left office in 2000, the median income was $52,500. When Bush left in 2009, that had fallen to $50,303.

"What is phenomenal about the years under Bush is that through the entire business cycle from 2000 through 2007, even before this recession...working families were worse off at the end of the recovery, in the best of times during that period, than they were in 2000 before he took office."

More people were in poverty, more children were in poverty, many, many fewer people had health care insurance coverage at the end of Bush's term than at the end of Clinton's. What's truly amazing about this record is that Republicans are under the impression that voters should reward them for such utter, absolute failure.

A rather important point

If doctors were forced by a public health care plan to accept Medicare rates, they'd be very unhappy, of course. But there's really not a whole lot they could do about it. They're unlikely to find work being doctors to the rich as the rich are already well-served and they're not likely to find a job that pays anywhere near what they make as doctors, whether getting Medicare-level pay or not.

So they'd most likely grumble, but that's about all they could do.

Health care debate - contributions of opponents

The third comment in response to a Paul Krugman column:

Re: Cap and trade and other democrat dilemmas, David Brooks describes Krugman perfectly:

“The party is led by insular liberals from big cities and the coasts, who neither understand nor sympathize with moderates. They have their own cherry-picking pollsters, their own media and activist cocoon, their own plans to lavishly spend borrowed money to buy votes.”

Sounds pretty convincing, eh? Problem is, I'm really not convinced there's any real equivalence between conservatives and liberals. After all, if conservatives were equal to liberals in policy smarts, why can't they come up with an alternative health care plan of their own?

Republicans who had promised last month to offer a healthcare reform alternative are now suggesting no such bill will be introduced.

Rep. Roy Blunt (R-Mo.) said, "Our bill is never going to get to the floor, so why confuse the focus? We clearly have principles; we could have language, but why start diverting attention from this really bad piece of work they've got to whatever we're offering right now?"

In other words: "We got nuthin'. We looked at our cupboard of ideas and it's bare." The would-be "great compromiser" Finance Committee Chairman Max Baucus (D-MT) is similarly bereft of ideas.

Senate Democrats are increasingly frustrated by the secrecy and duration of ... Baucus' ... bipartisan talks on health care reform...

Democrats both on and off the Finance Committee said the briefings they get about the six negotiators' progress are too vague. Plus, they say, without a bill in hand, they cannot defend or sell the package to a wary media and public.

Also, I've got a piece up responding to Governor Jindal's health care proposal.

House Minority Leader and the stimulus

Kind of amusing to read Eric Cantor's (House Minority Whip R-VA) criticisms of the stimulus bill.

"….A stimulus bill should have an immediate economic impact and create real, long-term jobs, and this stimulus bill has clearly not created jobs or fixed our economy."

Okay, and what "shovel ready" projects did the Republican Party offer back when the stimulus bill was being debated? They didn't. They offered tax cuts. What do tax cuts do? Well, President Bush gave America $1.3 trillion in tax cuts in 2001 and the recession continued until early 2003.

CNN even feels obliged to do a bit of due diligence and points out that:

Last week, House Minority Leader John Boehner found himself in the DNC's sights: Democrats released a tough Web video blasting him for saying the stimulus hadn't delivered for his state.

"In fact, millions in recovery act funds have been committed to dozens of projects creating jobs for people right here in Ohio," the narrator said in the DNC video. "…Now John Boehner is using baseless attacks to mislead the public about the success of the Recovery Act."

Which leaves Cantor with a score of zero out of two. Later,

Cantor spokesman Brad Dayspring called the stimulus a "bad deal" and a "misguided …pork-barrel bill."

Okay, what does a "pork-barrel" bill do? That's right, it calls for spending money. Something that's ordinarily bad, but in times of recession, is a very good thing.

Again, Cantor scores a zero.

Oh, and by the way, Lawrence Summers, head of the National Economic Council, claims that:

"Given lags in spending and hiring, the peak impact of the stimulus on jobs was expected not to be achieved until the end of 2010"

So critics are jumping the gun by at least a year and a half.

Also, the hapless RNC Chairman Michael Steele tries to expound on the economy. Think Progress corrects him, and in the process, gives a very good quick snapshot of how the debt relates to the deficit and how both have fared over the past decade or so.

Blue Dog Democrats and health care

*Sigh!* Why does  Senate Majority Leader Harry Reid (D-NV) hate Americans who want affordable health care?!?! I mean, I understand the whole kumbaya, lets-all-get-along, bipartisan spirit, but conservative Blue Dog Democrats (Misnamed as "moderates") vote for their donors, not their districts. It's ridiculous to treat their positions as  though they arise from philosophical differences.

As California goes…

What we're seeing in Kal-ee-for-nee-ya (As their Governor would say) is the Republican "Starve the Beast" strategy in action. The idea is to reduce te inflow into government coffers (i.e. taxes)  and to then get citizens to accept less in goverment services. It's working pretty well, if of course, you accept the idea that making the government spend less is a good idea all by itself and that people don't have any real need for government spending.

This is a slow motion train wreck of epic proportions. And at some point soon the horror of it is going to become very, very acute.

A little comic relief for y’all

Representative Michelle Bachman (R-MN District 6) explains to us the (*groan*) Hoot-Smalley tariff!

This would explain a lot

Statement #9 on Time's Mark Halperin's list of the reasons that the Republican Party is doing so poorly:

The near impotence of the right's long-term Big Three issues (national security, taxes, and social issues).

If Republicans are putting all economic issues under the category of "Taxes," that might explain why they're doing so poorly as a political party. The Washington Monthly piece notes that House Minority Whip Eric Cantor's (R-VA) "Solutions Center," has a single item in its' toolbag, a single answer for every problem "Taxes. Lower them."

Debate with libertarians and “Teabagger Parties”

This piece on PhillyIMC led to a group of libertarian "Austrian Economists" to kick off an extensive discussion about what caused the economic crisis. They're convinced it was the Fed and interest rates that are solely to blame for the crisis. I'm not really convinced, but I still have further research to do on the matter.

The "Teabagger Parties" that are scheduled to take place on the 15th are very  clearly sponsored and promoted by the Republican Party and their audio-visual arm, Fox News.

Latest Geithner/Obama plan

Various economists (Paul Krugman, Dean Baker & the blog Calculated Risk) are unimpressed with the Obama Administration's plan for dealing with the economic crisis. YouTube asks "Hey, Paul Krugman, where are you?" (Post also includes links to other issue-oriented tunes). And bleah! Don't even bother looking to the traditional media for answers about the economy.
Complete waste of time, speaking of which, the Inky made a stab at rousing the rabble at Obama's economic plan. Article speaks of sidewalk corners being cut so as to make them wheelchair accessible. Obviously, the bill that directs these corner cuts could have been better written. Not all the corners get much traffic and very frequently there are no sidewalks to go along with the corner cuts. Article drags in the totally-unconnected problem of Route 202 and how that needs to be widened.
Economists View blog rounds up the opinions of many good economists on the Geithner/Obama plan. Again, not very impressed.

Examination of economic crisis

Wall Street Watch puts out a 3 megabyte, 231 page PDF of a report on just what produced the economic situation of today. Summary of 12 main events:

1. In 1999, Congress repealed the Glass-Steagall Act, which had prohibited the merger of commercial banking and investment banking.


2. Regulatory rules permitted off-balance sheet accounting -- tricks that enabled banks to hide their liabilities.


3. The Clinton administration blocked the Commodity Futures Trading Commission from regulating financial derivatives -- which became the basis for massive speculation.


4. Congress in 2000 prohibited regulation of financial derivatives when it passed the Commodity Futures Modernization Act.


5. The Securities and Exchange Commission in 2004 adopted a voluntary regulation scheme for investment banks that enabled them to incur much higher levels of debt.


6. Rules adopted by global regulators at the behest of the financial industry would enable commercial banks to determine their own capital reserve requirements, based on their internal "risk-assessment models."


7. Federal regulators refused to block widespread predatory lending practices earlier in this decade, failing to either issue appropriate regulations or even enforce existing ones.


8. Federal bank regulators claimed the power to supersede state consumer protection laws that could have diminished predatory lending and other abusive practices.


9. Federal rules prevent victims of abusive loans from suing firms that bought their loans from the banks that issued the original loan.


10. Fannie Mae and Freddie Mac expanded beyond their traditional scope of business and entered the subprime market, ultimately costing taxpayers hundreds of billions of dollars.


11. The abandonment of antitrust and related regulatory principles enabled the creation of too-big-to-fail megabanks, which engaged in much riskier practices than smaller banks.


12. Beset by conflicts of interest, private credit rating companies incorrectly assessed the quality of mortgage-backed securities; a 2006 law handcuffed the SEC from properly regulating the firms.

Both Democrats and Republicans were responsible for the meltdown, but remember, deregulation is a specifically Republican idea. If Democrats did it, they did so specifically to establish their "serious person" bonafides.

Republicans having a “Pre-Recession Mindset?”

Democrats were accused (falsely) of having a pre-9/11 mindset. Are Republicans looking at the world with a "pre-recession mindset?"

The evidence is pretty compelling that the opposition party just doesn't comprehend  the economic trouble the US is in.

What are we left with? Republicans are pushing the same tax cuts they wanted before the recession. They're making the same arguments about spending they offered before the recession. They're engaged in the same petty games they enjoyed before the recession. In the midst of "an all-hands-on-deck emergency that's as trying as war," and in "the throes of a catastrophic economic crisis," the failed minority party, ignoring the election results, public opinion, and everything we know about economics, have the same approach to the economy that they had at this point a year ago. And the year before that. And the year before that.

And BTW, there are indeed people who think our president is failing to fix the economy in a timely manner. Only 2% of Americans share this view. The great majority have more patience.

Jon Stewart of The Daily Show does an absolutely classic smackdown of the financial channel CNBC. The takeaway from this is that the financial advice you get from these guys is about as good as what you'll get from any good astrologer or standard political pundit.

Economist Dean Baker agrees with Stewart. The ups and downs of the stock market tells us nothing useful or serious.

Update: House Minority Leader John Boehner (R-OH), acknowledges the severity of the economic situation and the horrific drop in employment, BUT advocates a "spending freeze," the precise opposite of what needs to happen. NY Times columnist Paul Krugman:

"I'm shocked by the total intellectual collapse of the Republican Party in the face of this economic crisis.... I'd really like to see some genuine bipartisanship in America. But that can't happen until we start having at least somewhat sane partisans."

Updates from various

From Washington Monthly:

Time magazine, highlighting some of those most responsible for the economic crisis, recently singled out former Sen. Phil Gramm (R-Texas), and for good reason. Few deserve as much blame as the former chairman of the Senate Banking Committee.

From Firedoglake:

The Diamond-Orszag plan for "reforming" Social Security calls for reducing benefits on youngsters to make up for people living long—and the younger you are now, the more the benefit reduction. Their plan is to make up half of the shortfall (a shortfall which may not even exist, we'll come back to that) by reducing benefits, and half of it by increasing FICA taxes. They do intend to increase the amount of money that richer people pay, modestly, and they also intend to reduce benefits for wealthier folks by more than they reduce benefits for those who have more average earnings.

From MediaMatters/County Fair:

Yep, the CNBC reporter who yesterday claimed the all-white, all-male traders surrounding him on the floor of the Chicago Mercantile Exchange represented a cross-section of America. In fact, at one point on Thursday, CNBC's Rick Santelli turned to face the floor, extended his arms toward the six-figure salaried employees and announced, "This is America!"

From Rich Gardner's  piece on PhillyIMC:

It's conventional wisdom that "everybody knows" that Republicans are really sharp on, and have lots of expertise on, the economy.  Erm, do they!?!?!?

Employment after eight years of Bush

Incredibly pitiful. A very sad record that underdoes every president since records began to be kept. The record for the last eight years was a little under 3 million net jobs created. Clinton's was 23 million!!!!!

That was a million and a half more than under Bush Jr., Bush Sr., and Ronald Reagan combined. More jobs in less than half the time.

Bush created about 375,000 jobs per year, Eisenhower created 438,000 per year. Remember, the US population under Eisenhower was half of what it is now!!!! That's not just the worst ever, that's by far the worst ever!

And I'm sorry, but I really had to guffaw at this quote:

Yet to talk to people still inside the Bush White House is to come away with a sense that they do not feel defeated at all. Rather, having been through the crucible of the worst terrorist attack on American soil, two wars, a hurricane of biblical proportions and the gravest economic crisis since the Great Depression, they describe a sense of achievement and honor in having served the country, and in particular this president.  [emphasis in quote]

Keep in mind that in all five cases, the Bush Administration had a great deal to do with creating the problem.  From failing to do due diligence to outright dereliction of duty to deliberately and consciously lying to the country. In none of these cases were they simply unlucky.