My wife, a labor economist, is upset with NPR’s “The Take Away” (and many other news programs) for reinforcing the myth that somehow the unemployed are to blame for not having a job. We all should be angry as well because the jobs just aren’t there. In fact, the latest unemployment statistics show that there are five unemployed workers available for every vacant job. Why blame workers when it’s so clear that Wall Street’s reckless gambling caused the jobs crisis? READ FULL POST
Take a hard, cold look at June’s tragic unemployment numbers. The Bureau of Labor Statistics rate is 9.5 percent, roughly where it’s been for more than a year. The BLS jobless rate (U6) is 16.5 percent — nearly 30 million people are without jobs or forced into part-time work. More than 6.7 million workers have been unemployed for more than 27 weeks. The administration can spin these numbers like a top, but Americans know in their bones that no one in Washington has a real plan to get our people back to work. READ FULL POST
“In reality, credit pollutants pose the same kind of threat to our economy as chemical toxins do to our environment. Like their chemical counterparts, they tend to concentrate in the weakest and most vulnerable parts of the financial system, and that’s where the toxic effects show up first: the subprime mortgage market collapse is essentially the Love Canal of our ongoing risk-pollution disaster.” Eric Janszen, Harper’s Magazine, February 2008
We’re living through two of the most catastrophic ecological disasters in history. BP’s spill is wrecking the Gulf’s ecosystem. It slaughtered 11 workers and destroyed the livelihoods of thousands in the fishing and tourist industries. And soon, we’ll start hearing about the terrible toll exposure to oil-related toxics is taking on the bodies of clean-up workers.
Meanwhile, Wall Street, led by financial giants like Goldman Sachs, JP Morgan Chase, Bank of America and A.I.G., polluted our financial system with toxic assets. The wreckage includes $6 trillion in lost economic value and at least 8 million US jobs destroyed in a matter of months. And like the Gulf spill, the Wall Street catastrophe will have deadly long-term consequences, as hundreds of dislocated workers die prematurely from the economic shock. READ FULL POST
As the financial reform bills grind through the congressional conference committee, the largest banks are howling like little brats because they haven’t gotten everything they want, right now! “Gimme!”
Of course the reform package already gives the biggest banks the juiciest goody of all by letting them continue to be “too big to fail.” Life will be good for the top 20 or so financial institutions. They’ll have access to cheaper funds based on implicit government guarantees –since everyone on the planet knows we’ll bail them out the next time they crash. (Hedge fund managers — the top 10 each earned a cool $900,000 an hour in 2009 — are also faring well on Capitol Hill. Senators just stalemated a measure that that would have forced them to pay income taxes like the rest of us instead of pretending their income is capital gains, which is taxed at lower levels. The idea had been to use those extra tax dollars to extend unemployment benefits and aid distressed state and local governments that are now laying off teachers. Let them eat cake.) READ FULL POST
Senate and House conferees are about to reconcile a financial reform bill that is virtually designed to institutionalize “too big to fail.” And when they do we’ll lose another battle in the ongoing war between global financial markets and democratic nation-states.
This war has been going on for decades — but democracy hasn’t always been in full retreat.
The New Deal Conquest: During the Great Depression democratic forces gained the upper hand in the war. We realized that financial markets, which are driven by the largest banks and financiers, had to be tightly controlled. We knew that global speculation on currencies only deepened the Depression and had to be strictly limited. We knew that an iron curtain was needed between commercial and investment banking to protect Main Street depositors from market madness (that was the Glass-Steagall Act). And most importantly we knew that the key to preventing economic upheaval was to limit the wealth of the super-rich and to increase the wealth of working people through progressive taxes, Social Security, wage and hour laws, and the promotion of unionization. The Bretton Woods agreements forged by the Allies during WWII set up strict rules for global finance, rules that kept financiers in check for more than a quarter century.
And it worked pretty damn well. As economist Joseph Stiglitz points out, this era saw only one financial crisis (Brazil, 1964), and working people in western democracies made huge gains. Since the era of deregulation took hold in the late 1970s, the world has suffered over a hundred financial crises and middle-class incomes have stagnated.
The Deregulatory Counter-Offensive: By the late 1970s, bankers regained the advantage through the spread of a new faith in self-regulated markets. The economic apostles of unfettered markets lobbied against progressive taxes, unions, and social welfare programs. The new orthodoxy was: Let the elites collect the money–they’ll invest wisely (instead of consuming), and all boats will rise. This near-religious revolution rapidly spread through the economic and policy establishment. Regulations were dismantled right and left, and the revolving door between government and Wall Street started spinning. The American financial catechism ruled the world. And on Wall Street, the money tap was open. It did not trickle down.
Then, suddenly, in 2008, the market gods destroyed themselves as the unregulated financial casinos crashed and burned, just like they did in 1929. For a few months, it seemed like the deregulatory theology become a global heresy. It was obvious that Wall Street’s reckless speculation and its bold new wave of financial engineering had caused the Great Recession. (See The Looting of America for an accessible account.). It was also clear that if government didn’t come to the rescue, Wall Street would lay in ruins, along with the rest of the economy. This was the perfect moment for democracy reassert democratic control on financial markets, just as we did during the New Deal. We blew it.
Senate and House conferees are about to reconcile a financial reform bill that is virtually designed to institutionalize “too big to fail.” And when they do we’ll lose another battle in the ongoing war between global financial markets and democratic nation-states.
This war has been going on for decades — but democracy hasn’t always been in full retreat. READ FULL POST
Is it good news that the hiring of 411,000 temporary census workers finally made a small dent in our enormous jobs crisis… at least temporarily? Shouldn’t we now listen more carefully to Senator Judd Gregg of New Hampshire who wants to cut off extended unemployment benefits? He explained it this way on CNBC:
Because you’re out of the recession, you’re starting to see growth and you’re clearly going to dampen the capacity of that growth if you basically keep an economy that encourages people to, rather than go out and look for work, to stay on unemployment. Yes, it’s important to do that up to a certain level, but at some point you’ve got to acknowledge that we’re not Europe. (Senator Judd Gregg on CNBC)
The honorable senator and many other pols and pundits apparently believe that at least some unemployed Americans are just coasting on their unemployment checks, having a bit of a vacation rather than grabbing one of the many jobs being generated in this red-hot recovery of ours.
Somehow Gregg and company studiously ignore the fact that there still aren’t enough jobs to go around. READ FULL POST
Dear Messrs, Tepper, Soros, Simons, Paulson, Cohen, Icahn, Lampert, Griffin, Arnold and Falcone,
It’s now estimated that about 150,000 teachers will lose their jobs next year because of the financial crisis touched off by your industry.
On behalf of the 3 million young people who would have been their students, I have a proposition for you: Donate 50 percent of your 2009 earnings to keep those 150,000 teachers in their classrooms. Each of you, on average, still would net over $935 million dollars for the year (you should be able to scrape by on that) — and the money you’d forgo would ensure that 3 million kids would get an education.
That the ten of you personally received $18.7 billion (not million) from your hedge fund proceeds in 2009 is quite a feat, given that it was the worst economic year since the Great Depression. You each got roughly $36 million a week — over $900,000 an hour! Meanwhile, as result of the Wall Street shenanigans you helped engineer, 29 million Americans are now without work or forced into part-time jobs. READ FULL POST
Wake up Congress! The financial reform bill you just passed won’t protect us from economic chaos. Why? Because it fails to burst the mother of all bubbles — Wall Street itself.
Our outsized financial sector is a clear and present danger to all of us. This gigantic bubble, which bankers and politicians have been pumping up for the past 30 years, now casts a dark shadow over our economy and our political system. It has distorted our distribution of wealth, making a few people obscenely rich while shrinking what’s left of the middle class.
The financial industry bubble started expanding during the 1970s with the push for deregulation. It grew even faster in the 1980s after Reagan and Congress dramatically cut taxes on the super-rich. The wealthy had to do something with their excess money, so they turned to financial gambling. Wall Street grew and grew, rising from about 7 percent of all corporate profits after WWII to more than 30 percent today. Financial executives got exceedingly rich. As Simon Johnson and James Kwak point out in 13 Bankers, “From 1948 until 1979, average compensation in the banking sector was essentially the same as in the private sector overall; then it shot upward…until in 2007 the average bank employee earned twice as much as the average private sector worker.” READ FULL POST
Now that the bank lobbyists are nearly finished neutering the financial reform bill, it’s time to face reality: our financial world will continue to be run by the very financiers who crashed the system two years ago. The bankers’ arguments ricocheting through the halls of Congress make it seem as if our financial system is basically rational and sound — that only a few flaws need fixing. That’s lunacy. Our bright bankers may be rational as individuals, but collectively they perpetuate a fractured system gone utterly mad… and getting madder every day. READ FULL POST
