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Tuesday News: “Morgan Stanley Economists Say Global Recession Now ‘Base Case’”;...

by Lowell Here are a few national and Virginia news headlines, political and otherwise, for Tuesday, March 17. Europe Goes Dark in Coronavirus Fight as...

Dave Brat Would Kill Wall Street Watchdog

Originally published on Daily Kos Dave Brat cosponsored HR 3118, "To eliminate the Bureau of Consumer Financial Protection by repealing title X of the Dodd-Frank...

May I Have Another Helping of Civil Demonstrations Please?


If Western-style liberalism were a boxer, the referee would have called a technical knock-out (TKO) by now in light of all of the hits and bruises it has taken since the 2008 economic recession alone. The economic recession within the U.S. in 2008 was not of course the first black eye Western liberalism has achieved for itself throughout its distinguished but short history. The history books are full of "shocks," "tragedies," depressions, recessions, and significant economic inequalities that flow from Western liberalism in the U.S. It was no wonder then that Karl Marx thought the U.S. would be among one of the first Western industrialized countries to begin a socialist revolution.

Western liberalism is still existent, of course, and seems very much here to stay, for the time being. But there is little doubt that if Western liberalism is to survive as an economic model against other challengers across the world (e.g. the "Chinese model"), something's got to give. Millions of Americans remain mired in the ranks of the unemployed, the unemployable, or the "I give up" category. All of this while some of America's CEO's made record profits (again...) so far in 2011.

What also seems clear from the Occupy Wall Street protests is that Western liberalism, or its elites, are fearful of legal demonstrations and acts of civil disobedience. Isn't the tree of liberty renewed through acts of expression, repression, and the reinforcement of beliefs, values, and institutions that underlie our liberties? That is, aren't civil demonstrations a good thing for our republic, or have we as a society become so interested in turning a profit that any disturbance of business-as-usual is viewed with contempt and fear?  

Are Individuals Responsible… in all cases?

There is a curious double standard running through what passes for civil discourse in today's political world. A common mantra from political leadership (especially the Republican Party) is that individuals must be responsible for their own condition. Hence, we are told that we should prudently save money all our lives for our health care and our retirement, and not depend on "entitlements;" that home buyers should never have bought houses they couldn't afford, that they should never have taken out exotic mortgages which they could not pay off; that every adult must understand financing, parse the fine print in contracts for everything from telephone service to automobile insurance, and know how to make intelligent choices in modern life from i-pads to vegetables.

We must, each and every one, be smart consumers in the market, and our market choices are defined as true freedom--- they tell us that nanny government distorts the market, is expensive, and interferes with freedom. When an elderly grandmother at a Republican town hall begs her Congressman not to monkey with her Social Security on which she depends, his response is, "When are you going to learn to be personally responsible?"

On the other hand, there is not a demand that institutions like banks and corporations show similar responsibility. While corporations are now officially and legally "people," somehow the concept of personal responsibility stalls out, lost in a protective fog. The idea is that "market forces" compel institutions to certain behavior, and government interference destroys that freedom as defined above.  Regulation of, say, exotic mortgages and derivatives is castigated as heretical. Nevertheless, when the stock market goes crazy with volatility, currency markets pummel the dollar, the private sector stops hiring, or there is a sudden public outcry against raising the debt ceiling, these are described as spontaneous outbursts of popular sentiment and public opinion. Thus, banks are not lending money because "they" are afraid of a double dip recession; and reporters say "the market reacted negatively to the jobs report," or to the debt ceiling standoff, or to the retirement of Steve Jobs from Apple.  

You’re Working Longer & Harder So The Rich Can Get Richer

Mother Jones chartMother Jones has a must-read cover story this month on The Great Speedup - how gains in worker productivity aren't being shared with workers:
[I]ncreasingly, US workers are also falling prey to what we'll call offloading: cutting jobs and dumping the work onto the remaining staff. Consider a recent Wall Street Journal story about "superjobs," a nifty euphemism for employees doing more than one job's worth of work - more than half of all workers surveyed said their jobs had expanded, usually without a raise or bonus.

In all the chatter about our "jobless recovery," how often does someone explain the simple feat by which this is actually accomplished? US productivity increased twice as fast in 2009 as it had in 2008, and twice as fast again in 2010: workforce down, output up, and voilá! No wonder corporate profits are up 22 percent since 2007, according to a new report by the Economic Policy Institute. To repeat: Up. Twenty-two. Percent. [...]

How does corporate America have the gall? You pretty much know the answer, but for official confirmation let's turn to Erica Groshen, a vice president at the Federal Reserve Bank of New York: It's easier here than in, say, the UK or Germany "for employers to avoid adding permanent jobs," she told the AP recently. "They're less constrained by traditional human-resources practices [translation: decency] or union contracts." In plainer English, here's Rutgers political scientist Carl Van Horn: "Everything is tilted in favor of the employers...The employee has no leverage. If your boss says, 'I want you to come in the next two Saturdays,' what are you going to say-no?"

In the face of this, what are Congressional Republicans like Rep. Eric Cantor proposing? Punish the people hurting the most to protect those benefiting from this grotesque "recovery." Gut Medicare to preserve Bush/Cheney tax cuts for that 1% whose income has soared. Lay off government workers to maintain subsidies for Big Oil. And not a dollar to put an American back to work.

Doomsayers Predicting State-Municipal Defaults

If you have a taste for gloom and disasters, then you will enjoy predictions of the coming default by states and municipalities across America on their heretofore sacred municipal bonds, the munis so beloved of retirees and pension funds. These bonds are the way local and state governments financed building the Interstate Highway system, schools, sewer plants, power grids, civic centers, every kind of infrastructure that underpins the modern way of life. Because these income investments were considered safe and were tax-free, they fill millions of retirement funds around the world, but now the sponsoring governments are on the brink of bankruptcy, almost at the point where they have run out of various fancy Enron-style bookkeeping tricks to conceal that fact, and observers say the next option is to default on paying the interest.  Says Frederick Sheehan, a muni bond analyst:
"This gradual deterioration of municipal finances has quickened over the past several months. Spending is rising and revenue is collapsing. Funding gaps have been disguised by accounting gimmicks."

Says Arthur Levitt, Former Chairman of the SEC:
"Fraud in the municipal market and incompetence, which in some ways is worse than fraud, has never been greater."

Obsessing About the Deficit vs. Opportunity Costs

UPDATE:The mania for budget-cutting is already adversely impacting the economy in the UK, where the new prime minister's threats of austerity have caused business confidence to plummet: reported here

President Obama has appointed a commission to examine the deficit, signaling that he has accepted the conservative view that the government's spending is out of control and threatening to force the United States into bankruptcy. The composition of the commission,  is such that progressives believe, probably correctly, that it will recommend slashing "entitlements" like social security, and killing any idea of spurring economic recovery through government spending like the New Deal under FDR.

In other words, the change Obama promised in the campaign has mutated into something conservative, not progressive, in a total triumph of the anti-Keynesianism of the Free Marketeers and Wall Street---- Goodbye to promises made to Main Street, Hello to the so-called fiscal discipline, anti-labor, pro-big business philosophy of Friedmanism and an only partially-understood version of the Austrian school of economics.

Not everyone agrees that now is the time to cut federal government spending, or that the deficit is utterly out of control or, that, to protect our grandchildren from crushing federal debt payments, this is the moment to take up the cheese-paring ways of the No-Tax crowd. In fact, this may well be the exact time when applying stringent fiscal discipline is precisely the wrong thing to do.