Recently in Economics Category

I'm on the same side as well known GOP douchebag Dick Armey and opposing Chris Dodd on an issue.

Hidden deep in Senator Christopher Dodd's 630-page Senate housing legislation is a sweeping provision that affects the privacy and operation of nearly all of America’s small businesses.The provision, which was added by the bill's managers without debate this week, would require the nation's payment systems to track, aggregate, and report information on nearly every electronic transaction to the federal government.
They want to know every damn thing according to the former House GOP Leader's new toy, FreedomWorks. Every Credit Card transaction, every online checkout system like eBay, PayPal, Amazon and Google Checkout are included. Everything and anything you buy or sell online or though any electronic means is now official government business. (HT: BBB and Shakes)

John Berlau at The Wall Street Journal wants to know where the outrage is since he and Tom Hartman have been talking about this since May when Berlau alerted us to the requirement that all loan originators submit their fingerprints to a national database, including the FBI and any other government agency they deem appropriate. Mortgage lenders, brokers, even clerical or part-time employees of real estate firms are included in this.

Pal, we've just got started on the outrage front. There's enough angst out here in Blogtopia (y!sctp!) over the FISA Telecom Immunity capitulation that this is just the thing that could serve as a new cause de jure as we await what our champions of liberty in the Senate do with FISA as well as this.

Both Barack Obama and Hillary Clinton are co-sponsors of original version of this bill which also included (but also buried) the fingerprint provision. This should be an interesting week as Obama makes clear just what he means by "fighting" the Telecom Amnesty provisions of FISA and if he or Dodd or Hillary get the memo that we're all quite disillusioned, rather pissed in fact, and this latest abomination just might seal the deal.

Jesus, I'm beginning to think that John Edwards got out of the way of "History" just in time for it to steamroll over us all.

The WSJ also reports that the SEC and the FED are going to do what they can to tighten up some of the regulation that lead to the crisis in the financial markets, a clear signal that there is tacit acknowledgment in Washington and Wall Street that the unfettered deregulation schemes that have been the hallmark of conservative dogma these last 30 years are directly responsible for our current economic meltdowns.

Quick on the heels of the scramble to close the barn door, Barack Obama is making positive noises about fixing the Enron Loophole in a wholly rational, non-gimmicky step towards an immediate solution to the rising cost of fuel by taking the speculators and other pirates out of the market.

Infuriatingly enough, John McCain called Obama a copycat for his initiative and blamed Clinton for the loophole without so much at a blink, knowing that his "econ brain," Phil Graham wrote the Enron Loophole, tagging it's 262 pages to an essential, eleventh hour, eleven thousand page government reauthorization bill signed by Bill Clinton a few weeks before "W" was sworn in.

In the early evening of Friday, December 15, 2000, with Christmas break only hours away, the U.S. Senate rushed to pass an essential, 11,000-page government reauthorization bill. In what one legal textbook would later call "a stunning departure from normal legislative practice," the Senate tacked on a complex, 262-page amendment at the urging of Texas Sen. Phil Gramm.

There was little debate on the floor. According to the Congressional Record, Gramm promised that the amendment--also known as the Commodity Futures Modernization Act--along with other landmark legislation he had authored, would usher in a new era for the U.S. financial services industry.

"The work of this Congress will be seen as a watershed where we turned away from an outmoded Depression-era approach to financial regulation and adopted a framework that will position our financial services industry to be world leaders into the new century," Gramm said.

As Senator Blutarsky's wife's gynecologist said, we fucked up, we trusted him.

by Mark Adams

This is just sick.

Copper thieves force shutdown of Ohio soup kitchen

May 30, 2008 07:36 EDT

COLUMBUS, Ohio (AP) -- Copper thieves have struck a major soup kitchen in Columbus, forcing it to stop feeding the needy.

The Holy Family Community Kitchen and Pantry says two large
refrigeration compressors were unbolted from their concrete pads and
taken away over Memorial Day weekend, and the thieves also stole copper

Director Frances Carr says the soup kitchen couldn't
keep the food cold, so it spoiled and had to be thrown out. Carr says
that was tough to do at a time when so many people are in need.

By Wednesday, the facility had to shut down.

Carr hopes to reopen Monday but isn't certain that will be possible.

The news isn't just that they robbed a soup kitchen is Columbus, Ohio, rather There Are Soup Kitchens in Columbus, Ohio!

It sounds like John McCain is joined at the hip to one of those Disaster Capitalists Naomi Klein warned us about in her book Shock Doctrine. Hilzoy (guesting for Kevin Drum) quotes James Galbraith's discription of former Texas Senator (figures), recent lobbyist, current campaign Co-chair and economic guru for John McCain ...

"Phil Gramm's career was as the most aggressive advocate of every predatory and rapacious element that the financial sector has," Galbraith said. "He's a sorcerer's apprentice of instability and disaster in the financial system."
Hot on the heels of Keith Olbermann's revelation that Gramm, whose deregulatory scemes played a direct role in the Enron scandal, was/is on the payroll of a Swiss bank lobbying Congress (and evidently McCain himself) on how the U.S. should handle the mortgage crisis.
McCain and Gramm have been friends for more than a decade. McCain chaired Gramm’s 1996 presidential run and Gramm says the two men speak every day. McCain reportedly has hinted Gramm might serve as his Treasury secretary.

Last summer, Gramm was widely credited with saving McCain’s presidential campaign.


After Gramm passed a law easing regulation of energy-commodity trading, California experienced a sharp run-up in energy costs. The energy-trading company Enron was blamed and soon collapsed.

In 1999, Gramm successfully undid the Depression-era Glass-Steagall Act, removing the decades-old wall between commercial banking, which was heavily regulated, and investment banking, which was not. The Gramm-Leach-Bliley Act did not extend significant new regulation to investment banking.
This may be the last gasp of the anti-New Dealers, but they've come leaded for bear. Or was that Bear Sterns? Hilzoy is flabbergasted.
But it just defies belief that McCain would have, as his main economic advisor and one of the people responsible for his plan to deal with the mortgage crisis, someone who was a paid lobbyist for a bank that was heavily involved in that crisis, a firm that has just advised some of its employees not to travel to the US for legal reasons, and that stands to gain or lose a lot depending on what the federal government decides to do about it. What's next: the revelation that McCain's policy on Iran is being written by a lobbyist for the makers of cruise missiles? Or that he has outsourced his health care policy to a lobbyist for the National Funeral Directors Association?
Without a trace of irony, John McCain's spokesman the GOP nominee "preferred to focus on homeowners "truly in need" and opposed bailouts for affected banks." However, instead of supporting legislation that would have allowed bankruptcy judges the authority to modify loan terms to help home owners stay on their property, he in effect said on March 25th, "The mess you are in is your own fault. Don’t expect any bailouts from me."

Interesting that this is exactly what the banking industry, and Phil Gramm, wanted. The legislation died.

The sooner we are rid of the cancer these "compassionate conservatives" have foisted on us, the better. Let's just hop the rumors that Bush will start bombing Iran to help keep his buddies in power is just that, a rumor.

by Mark Adams

As more and more of us begin to appreciate the ramifications of "Peak Oil," or at least its artificially growing myth on our current state of affairs from the gas pump to the how and why the lid has been kept on Iraq's sea of crude since at least 1928, even proven skeptics are joining the throng who upon seeing storm clouds on the horizon pronounce in grave tones that the sky is falling, the end is near, and that you're gonna look fondly on the good old days of $4.00 gas.

But a couple of throw-away statements running 'round Blogtopia (Y!Sctp!) that the price of gold was going up against the weak dollar, yet nobody talks about "peak gold" -- and coincidently we are faced with a housing bust that will most likely suck dry a good deal of pension fund capital right into the Big Shitpile, got me shining up the old tin-foil hat.

It stands to reason that if the folks in big oil (who consider George Bush some kind of savant for getting that MBA from Harvard) can figure out a way to rig the system for maximum profits by exploiting and prolonging the peak oil syndrome where production capacity is maxed while demand keeps growing by keeping the world's 2nd largest proven oil reserves locked up in war or embargo or artificially low quotas for generations; then really smart guys like corporate raider Carl Icahn specializing in real estate and stocks & bonds would find a way to tap into the last great untapped sources of wealth in this country: pension funds and family homesteads.

All that potential liquidity just sitting there, doing nothing. It might as well be rotting for all the good it's doing. If assets aren't trickling up or down or at least somewhere, what good are they.

But there's another source of wealth in America those smarty-pants Wall Street types overlooked. All that dirty, old, gold jewelry in your dresser drawer! What use is it just laying there? Don't you know there are nice gentlemen who will even send you a pretty envelope so you can mail back that tarnished junk and they'll send you a nice, new, big, fat check in exchange! Doesn't that sound great?

So, here's the plan:

First, I'll send you a nice envelope, see, and you send me all of your gold you aren't using right now. Any precious metal will do. That old class ring, the extra-backs and orphaned earrings whose mate was lost who-knows-where. You might as well face facts and get rid of that extra wedding ring since s/he ain't coming back. Photobucket

Chains? Really? That's so 80's. Junk 'em.

But instead of sending you back a check any pawn shop owner could give you, I'll be sending you a stock certificate in my new venture capital investment plan, see. They've got all these audio-cassets (real cheap now since they're from 2006) on how these guys called hedge-fund managers can make oodles of dollars investing other people's pension money and refinacing their second mortgages. I'm going to listen to most of them and get cracking.

It's easy money and you can be part of this exciting opportunity just by sending me all of your precious metals and I'll give you ... something really neat my daughter designed using her certificate-maker module from iWork's Pages.

That's right. I'm asking you to give me something of value for absolutely nothing in return. But what the heck? It might make you feel better squandering your wealth on someone who's at least honest about stealing from you instead of the swindlers picking your pocket at the gas station, bank and whatever arm of government that put out its hand this week. And it sure as hell will make me fell better.

Cuz Obama ain't buying me no Jet Ski, and I can't afford one without your help.

by Mark Adams

Via: U.S. House passes bill to sue OPEC over oil prices.

That's right, we're bringing out the big guns and suing Saudi Arabia, Iran and Venezuela for violating American antitrust laws. Cartels and other such price-fixing monopolies are just unAmerican! If those bastards can't play by our rules, we'll bury them in litigation.

Problem solved! I expect gas to drop to pre-Bush $1.60/gallon levels any day now.

I think I told you about one of my favorite political cartoons from Tom Toles. It's somewhat dated, but only in the sense that the chickens have already come home to roost:

First panel: India, where people are sitting in cubicles designing software
Second panel: China, where people are in a factory manufacturing cars
Third panel: US, where a really fat guy is sitting before a bank loan officer saying, "I want refinance my mortgage so I can buy more stuff."

Now this:

The Iraq war, says economist Joseph Stiglitz, is “the first U.S. war financed entirely on credit.” When the war started, the Bush administration said it would cost no more than $60 billion. But the U.S. budget was already in deficit, so the administration had to borrow money to finance the invasion. About 40 percent of the money was borrowed from China and other international investors—the first time since the Revolutionary War that foreigners financed a U.S. war.

At the same time, the administration and Congress lowered taxes instead of raising them, as is customary in wartime The Federal Reserve kept interest rates low, which encouraged middle-class Americans to go on a consumption binge financed by credit cards and home-equity loans. Today, say Stiglitz and other economists, the bills for the country’s spending spree are starting to come due, in the form of higher prices, a weakened dollar, and lower living standards. “There’s no such thing as a free war,” Stiglitz said. “The U.S.—and the world—will be paying the price for decades to come.”

I've often said that the entire Republican orthodoxy has led us to a point in time where they want to reduce taxes to zero and borrow the entire cost of running the government -- from China. If we can hire private contractors to do it (e.g., Newt's proposal to hand it over to Fedex) so much the better -- then shareholders (the elites of The Ownership Society) will finally call all the shots. Never mind "one person, one vote." In The Ownership Society, it's "ten thousand dollars, ten thouand votes.

That's what I think this election should be about.

The Fed cuts the benchmark Fed funds rate by 25 basis points. Is it enough? Or is it just more of the same thing that got us to where we are today -- at the brink of a global rout of the dollar?

A quick summary:

  • The greenback has lost the world's confidence
  • Oil is up (because the dollar is down)
  • Gold is up (ditto)
  • Commodities are up (ditto)
  • Food is up
  • The Euro is up (see above)
  • The dollar is down below the swiss franc
  • US based investments are crap ... so we can't raise capital
  • Import prices are surging
  • Here comes stagflation (inflation plus unemployment) because the Fed just keeps printing more money to bail out Bear Sterns et. al.
  • Good news -- exports are up, trade deficit down.
  • Bad news -- oil imports offset those gains.
You can cut the benchmark fed funds rate all you want but the real problem is bank solvency -- and where is the capital for that going to come from (see above, "US-based investments are crap")?

Heckuva job, Bushie. Only one thing left to do: hand it off to the Dems and then blame them when the world economy crashes.

  • Is it just me or did AP's Ron Fournier just imply that Barack Obama was uppity? Fournier describes qualities that all presidential candidates have -- arrogance, self-importance and a sense of entitlement -- and, identifying them in Obama, tells the Senator he "better watch his step."
  • Sen. McCain backs up Obama on Wright saying, "I do know Senator Obama, he does not share those views." Certainly he'll let the 527s slam the Illinois Senator while he (McCain) remains above the fray. Still, it stands in contrast to the Clinton/Ferraro campaign's approach to Obama's race.
  • And, for the record, Obama was not in church on July 22, 2007 -- despite what Bill Kristol et. al. are suggesting.
  • Excuse me but WTF? A run on one of the nation's biggest banks happens and the response from the presidential candidates is...crickets?

by Mark Adams

It wasn't her unapologetic stance on the Iraq War, now or then. Truthfully, the moment any of us signed on to support John Kerry, we gave Hillary a pass on her vote for the AUMF, even if we reserved the right to nit-pick her votes to fund the war. It's not the triangulation, or Bill's clumsy rants on her behalf. It's not the two-faces of her flag-burning position, or health-care mandates.

It's the fucking lies about the economy, stupid.

"The notion that you can selectively pick what you take credit for and then run away from what isn't politically convenient, that doesn't make sense," Obama said. "If she suggested she had nothing to do with economic policy in the Clinton White House, then it would not be fair for me to bring it up but as you know, that's not the claim that she is making."
For her to insist that NAFTA not only was a bad idea, but that her wise counsel against it was ignored by her husband which allows her to take credit for much of the good from Bill Clinton's administration while distancing herself from one of it's most glaring examples of right-leaning policy mistakes -- only to be reminded that she herself includes it as something in her record of accomplishments to which she stands proud -- is a lesson in cherry picking.

David Sirota found the money quote from a 2002 speech Hillary Clinton gave to the DLC (the Republican wing of the Democratic Party):

"We all know the record of the DLC, the Progressive Policy Institute and, of course, the Clinton-Gore Administration. The economic recovery plan stands first and foremost as a testament to both good ideas and political courage. National service. The Brady Bill. Family Leave. NAFTA. Investment in science and technology. New markets. Charter schools. The Earned Income Tax Credit. The welfare to work partnership. The COPS program. The SAFER program. All of these came out of some very fundamental ideas about what would work. The results speak for themselves. Those ideas were converted into policies programs that literally changed millions of lives and, I argue, changed America."
I'll not argue with her that much of this was good, very good in fact. But here in the Rust Belt, NAFTA is a four letter word (a testament to our economic condition, not the educational system). She knows it, which is why, as the Ohio primary looms and the Pennsylvania primary looks increasingly like a contest she might not even get to, the last thing she wants around her neck is a trade deal so many of us here have concluded is responsible for wiping out what once was one of the most economically prosperous regions in the country.


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