Audit the FED!!! NOW!!!!!

The Federal Reserve has demonstrated conclusively and without question that it simply isn't capable of doing the job that's assigned to it. It desperately needs direction and oversight from the federal government. Currently, there's a bill to audit the Fed that, amazingly, doesn't have 100% support from both Congress and the Senate. Why this is even a question is absolutely amazing to me.

The principle that government agencies should be transparent and publically accountable is a cornerstone of democratic, responsive government, which is why those who favor plutocracy, let alone kleptocracy, find the concept so threatening. But the US financial sector and its governmental partners have for decades assiduously promoted the view that the Federal Reserve should be exempt from scrutiny, because, they claim, otherwise its "independence" would be as risk. Never mind that the dangers a nation’s economy faces can as easily come from the Fed’s co-dependency with the nation’s largest, irresponsible banks when coupled with a market ideology that encourages fraud and looting. If ever there was a sector that needed sunlight, this is it.

The case that an effective Chairman of the Federal Reserve could have poked a hole in the housing bubble back in 2004 and could have thereby prevented that bubble from crashing with the devastating effects that it did... well, good economists have been making that case since at least 2002. The sad part is that the regulators were so full of their own "wisdom" (Read: "arrogance") that nothing was done until long even long after the crisis hit and passed, leaving untold wreckage in is wake.

Update: Speaker Pelosi is now claiming that the Bush Administration knew about the coming collapse in early June, 2008, about when Obama received the Democratic nomination for President. Congress was actually briefed in September.

Extremely important point on SEC porn-surfing

Quite properly, people are outraged that surfing the Internet for porn was such a major activity at the Securities & Exchange Commission during 2007-8, just when the economy was collapsing.

Forbes:

The female accountant tried to access online pornography from her office laptop nearly 1,800 times in two weeks, CNN reports. She also had 600 sexually explicit images saved on her hard drive.

But the really important question is:

But it is not just that the problem was born and matured under Bush and Cox, it is the fact that it is symptomatic for the emasculation and gutting of the SEC which occurred at their hands and express direction. It was not a bug, but a feature.

In other words, did people working at the SEC really have anything better to do, or were they so bored and distracted in their powerless state under the Bush Administration that they simply had nothing better to fill their days with?

“Deficit Reduction Blindness”

Refers to a syndrome whereas someone wishes devoutly to reduce the deficit, but is blind to the very real pain that would cause to real, live, human beings. The NY Times has writers who are susceptible to this dread disease. For some odd reason, afflicted reporters are unable to see or comprehend that the just-passed Affordable Care Act reduces the deficit. They all consider it as something that increases indebtedness. Very strange disease.

This is one of the first pieces in the series of the Campaign for America's Future "Virtual Summit on Fiscal and Economic Responsibility for People Who Did Not Wreck the Economy." The idea is to counter billionaire deficit scold Pete Peterson and his enablers and their "Fiscal Summit" on April 28.

Update: Tax information sheet.  No, the tea partier's charge that taxes have gone up under Obama are simply not true. The average citizen is actually paying less than under the last guy.

Hmm, which to choose?

Let's see, we can go for billionaire deficit scold Pete Peterson's solutions to the Federal deficit and reduce grampa and grandma to eating cat-food in a four-story walkup with broken windows or maybe, perhaps, we can engage in some common sense and humanity and try out these 10 ways to get the rich to pay their fair share. Hmm, what to do? What to do?

BTW, Dean Baker is getting together with Campaign for America’s Future to counter Pete Peterson's heavily hyped “2010 Fiscal Summit.” Please email Bill Scher here to sign up to participate.

Graph using data from National Priorities

Using data from the National Priorities website, I checked the total military equipment and personnel outlays that come from Pennsylvania's taxes from 2001 to 2007.

Chart showing expense of wars as specific to PA



Heh! And y'all thought Republicans could be trusted with taxpayer money?  Note that the proportion of those taxes going to the military rises from about 7% to almost 11%.

Early warning on housing bubble

Michael Burry saw the housing bubble forming as early as 2003 and became very concerned about it in 2005. He bought up lots and lots of credit-default swaps and bet that the market would collapse, well, just about the time that it did collapse. He made lots and lots of money off of his foresight, but regrets that Federal Reserve Chairman Alan Greenspan was so completely oblivious to the growing bubble.

Very interestingly, he points out that "the F.B.I. reported that its mortgage fraud caseload increased fivefold from 2001 to 2004." Seems to me that should have set off major alarm bells in the upper reaches of the financial sector. Unfortunately, Paul Krugman is precisely correct in saying that Senator Chris Dodds' (D-CT) proposed financial regulatory reform bill is far too dependent upon regulators being sensible. The housing bubble very clearly showed a real lack of sensible thinking on the part of those very same regulators (And yes, Krugman was one of those who saw the housing bubble many years before it burst). Krugman also tells us why Greenspan never saw the bubble:

Greenspan’s whole defense now is that nobody saw it. But there were an awful lot of nobodies — Dean Baker, Bob Shiller, Calculated Risk, and yes, yours truly. What’s probably true is that nobody Greenspan talked to regularly saw it. And you know why? Because Greenspan insulated himself from people who told him what he didn’t want to hear.

Woo-hoo! Health care bill passes!

And gee, wow, amazingly enough, the stock market didn't go down.  Hmm, could that be because the market was aware that President Obama threaded the needle of corporate opposition and made it clear that he wasn't a business-hating radical?

The blog firedoglake has written very extensively on the health care issue and delivers a mixed verdict on the results.

There are still a few details left to go, but this appears to have been the real "heavy lifting" task that needed to be done. Now the Senate has to do its thing and then the President has to sign it.  Unfortuately, the traditional media deserves a grade of "F" for their coverage of the debate. Coverage was very, very heavy on "political process and Beltway politics" and very, very light on "serious policy analysis." The rap in this post is that Howard Kurtz tries to make believe that this is all a recent or easily-explicable development and not a long-term, systemic problem.

The right wing has really gone over the edge about this. The false equivalence that the traditional media likes to engage in (Establishment reaction to 911Truthers and Birthers and Vince Foster conspiracy-buffs are the same) is difficult to pull off here as we see even Congresspeople engaged in getting tea party protesters riled up and waving protest signs along with:

Demonstrators outside the U.S. Capitol , angry over the proposed health care bill, shouted “nigger” Saturday at U.S. Rep. John Lewis , a Georgia congressman and civil rights icon who was nearly beaten to death during an Alabama march in the 1960s.
The protesters also shouted obscenities at other members of the Congressional Black Caucus , lawmakers said.
“They were shouting, sort of harassing,” Lewis said. “But, it’s okay, I’ve faced this before. It reminded me of the 60s. It was a lot of downright hate and anger and people being downright mean.”

Former Bush aide David Frum agrees that the completion of the health care bill is "Waterloo," but disagrees as to which side suffered that implied fate.

Update: The Speaker outlines benefits more or less immediately available for Americans from the just-passed health care bill.