Did anyone really think that the geniuses who made millions running their companies into the ground; who nearly brought global financial markets to a crashing halt; and who were bailed out in spite of their misdeeds were really going to change their ways.
Why should they?
Obviously, the message that they received from the TARP bailout was that their system worked. At least it did for them. And after all, since Wall Street drives the economy, they are all that matters, right?
In her article, Lorraine Wollert reported:
” Elizabeth Warren, a chief watchdog of the government’s rescue of Wall Street, said the $700 billion bailout hasn’t stopped the “culture of excessive risk-taking” that led to the financial crisis.
The Troubled Asset Relief Program also has “injected an unprecedented level of pricing distortions and moral hazard into the marketplace,” Warren said at a hearing today of the Congressional Oversight Panel on TARP, which she leads.
“Uncertainty persists about the stability of our financial institutions and whether they can survive without the benefit of government assistance,” Warren said.
The oversight panel heard testimony from economists about the effectiveness of the program. Treasury Secretary Timothy Geithner must decide whether to extend the rescue program beyond its scheduled expiration at the end of the year.
Warren said banks are relying on government aid and consumer lending to make money.
“That’s not a sustainable profit model,” she said.
So can we finally say it?
All together now:
An economy based primarily on debt and credit and very little production of tangible goods simply is not sustainable.
But this is what we have. A service economy that runs on debt and credit. An economy built on: financial schemes; health care for profit; outsourcing production; illegal labor: and most of all, GREED.
We just didn’t learn our lesson. So now prepare yourselves for the rollout of TARP 2.0 aka TARP Reloaded.
In the following video from FireDogLake Elizabeth Warren provides an honest assessment of this situation.
I certainly don’t have all the answers for fixing this problem. But I do agree with Albert Einstein who is quoted as saying, “Insanity: doing the same thing over and over again and expecting different results.”
And if TARP Reloaded fails, don’t hold your breath for TARP Revolutions. That would be a contradiction in terms.
First, let’s get the partisan politics out of the way.
It might have been the Clinton or the Bush (41& 43) administrations that got us in to this economic mess. And the policies of the Obama administration may be: correcting the problem; making things worse; simply applying a band-aid to a knife wound; or, all of the above. Your view of today’s economic news will probably depend on how you’re affected by it and your political affiliation. But one thing is true. Wall Street may be recovering but the average American is still maneuvering on a slippery slope.
Less than two months ago U.S. President Barack Obama stated that all signs indicated that the economy wasstarting to grow and financial markets were starting to work again. But while sending an encouraging message to Wall Street he did add the caveat that employment statistics did not indicate improvement and, in fact, could get worse over the next couple of months. This was the message that the President reiterated today.
No one should be surprised by today’s announcement that unemployment has reached 10.2 percent.
Columnist Lynn Sweet reported on details provided by the Department of Labor:
“In October, the number of unemployed persons increased by 558,000 to 15.7 million. The unemployment rate rose by 0.4 percentage point to 10.2 percent, the highest rate since April 1983. Since the start of the recession in December 2007, the number of unemployed persons has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points.
Among the major worker groups, the unemployment rates for adult men (10.7 per- cent) and whites (9.5 percent) rose in October. The jobless rates for adult women (8.1 percent), teenagers (27.6 percent), blacks (15.7 percent), and Hispanics (13.1 percent) were little changed over the month. The unemployment rate for Asians was 7.5 percent, not seasonally adjusted.
The number of long-term unemployed (those jobless for 27 weeks and over) was little changed over the month at 5.6 million. In October, 35.6 percent of unemployed persons were jobless for 27 weeks or more.
The civilian labor force participation rate was little changed over the month at 65.1 percent. The employment-population ratio continued to decline in October, falling to 58.5 percent.
The number of persons working part time for economic reasons (sometimes refer- red to as involuntary part-time workers) was little changed in October at 9.3 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
About 2.4 million persons were marginally attached to the labor force in October, reflecting an increase of 736,000 from a year earlier. (The data are not sea- sonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
Among the marginally attached, there were 808,000 discouraged workers in October, up from 484,000 a year earlier. (The data are not seasonally adjusted.) Dis- couraged workers are persons not currently looking for work because they believe no jobs are available for them. The other 1.6 million persons marginally attached to the labor force in October had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.”
Add to these numbers: the millions of workers who lost a job and replaced it with a lower paying one; the millions whose salaries have been frozen for a few years; the millions of retirees who lost a large portion of their retirement savings when the market crashed; the millions who lost a substantial amount of the equity in their homes: and, the Social Security recipients who will not get a cost of living adjustment (COLA) in 2010, and many Americans are still wondering when things will get better for them.
However, while many Americans are holding on by a life preserver the banking industry is preparing to throw them an anchor. Yes, the financial markets are definitely working again and working in the same old way.
Earlier today, Megan Woolhouse of The Boston Globe reported:
“Credit card companies are rushing to increase interest rates to historic highs of more than 30 percent, cut credit limits, and add new fees, even for customers who pay their bills on time.
Lenders are making the moves in advance of tougher federal regulations for credit cards scheduled to take effect on Feb. 22. The new rules will limit how companies can modify credit card agreements, specifically prohibiting them from retroactively raising interest rates and fees on existing balances.
US Representative Barney Frank, the Massachusetts Democrat who chairs the Financial Services Committee and is a leader in the effort to revamp credit card policies, said banks have ‘abused’’ the nine-month period granted them to re-tool their practices.
‘I didn’t think they would be as blatant as they were about doing this,’ he said. ‘There’s no justification for raising rates retroactively. This is really just a way for them to make more money.’ “
And by the way, have you noticed that gasoline prices are inching up?
Ok, I’m not going to say, “I told you….”
No I’m not going to say it. If you’re reading this blog, I’d just be preaching to the choir.
While the US may be moving one step closer to health care reform with the passage of the Baucus Bill by the Senate Finance Committee, it is clear that a very important element in the health care discussion is being overlooked. What is making Americans so sick?
Health care costs wouldn’t be so high and there wouldn’t be so much concern about the cost of a public health care plan if so many Americans weren’t so sick.
Right?
On Monday, the New York Times reported on the hundreds of thousands of gallons of toxic waste being dumping into the nation’s water supply by coal-fired power plants. In the article, “Cleansing the Air at the Expense of the Waterways“, Charles Duhigg reported:
“For years, residents here complained about the yellow smoke pouring from the tall chimneys of the nearby coal-fired power plant, which left a film on their cars and pebbles of coal waste in their yards. Five states — including New York and New Jersey — sued the plant’s owner, Allegheny Energy, claiming the air pollution was causing respiratory diseases and acid rain.
So three years ago, when Allegheny Energy decided to install scrubbers to clean the plant’s air emissions, environmentalists were overjoyed. The technology would spray water and chemicals through the plant’s chimneys, trapping more than 150,000 tons of pollutants each year before they escaped into the sky.
But the cleaner air has come at a cost. Each day since the equipment was switched on in June, the company has dumped tens of thousands of gallons of waste water containing chemicals from the scrubbing process into the Monongahela River, which provides drinking water to 350,000 people and flows into Pittsburgh, 40 miles to the north.
‘It’s like they decided to spare us having to breathe in these poisons, but now we have to drink them instead,’ said Philip Coleman, who lives about 15 miles from the plant and has asked a state judge to toughen the facility’s pollution regulations. ‘We can’t escape.’
Even as a growing number of coal-burning power plants around the nation have moved to reduce their air emissions, many of them are creating another problem: water pollution. Power plants are the nation’s biggest producer of toxic waste, surpassing industries like plastic and paint manufacturing and chemical plants, according to a New York Times analysis of Environmental Protection Agency data.”
If the air pollution caused by coal-fired plants has already been linked to chronic asthma and COPD, just imagine the result of ingesting large quantities of the same toxins in your drinking water.
In an article for Care2.com, Melissa Breyer reported on the link between pesticides and Parkinson’s Disease.
A study by eminent oncologists Dr. Leonard Hardell and Dr. Mikael Eriksson of Sweden concludes that there is a link between “the world’s biggest selling herbicide, glyphosate (commonly known as Roundup, marketed by Monsanto), to non-Hodgkins lymphoma, a form of cancer.”
The following video clip is from the documentary “The World According to Monsanto” which took an in-depth look into the bio-chemical companies impact on agriculture, the environment and health.
And while we’re discussing Monsanto we certainly can’t forget their efforts to bury the truth about rBGH (bovine growth hormone) in milk.
There are many, many more instances of links between toxic waste and disease but I think that you get the picture.
Corporations have been dumping toxins in the water, air and food supply with impunity. The American public has grown sicker which has in turn driven up health care costs. Health care insurers are profiting from this illness. And now the corporate lobbyists and insurance industry spin machine are waging a full scale assault on health care reform.
Dear Members of Congress and President Obama,
if you really want to reform health care please take a comprehensive approach to this problem. How can you not pass health care reform with a public option when the government agencies which were supposed to protect the environment, agriculture and public health have failed us so miserably.
The previously cited New York Time article shows that the Riverhead International Coal Plant in Macon GA has been cited for 124 violations, paid $0 in fines and hasn’t been inspected since 1979.1979 – 30 years ago.
Let the teabaggers and birthers rant, rave and spread lies about “death panels” but don’t give in to the insanity.
Americans can diet, exercise, visit the doctor and take all the pills we want. But if the biochemical and power industries continue to poision the air, water & food, we will grow sicker and sicker. Health care costs will both bankrupt consumers and increase the federal deficit. And in the end, we will die. Those without health care coverage will just die much quicker.
Congress must pass health care with a public option and if you want to reduce costs take on the corporations that have contributed to this crisis. Fine them. Shame them if you have to. Expose them for the greedy, heartless profiteers that they have become.
How dare Wellpoint sue the State of Maine to ensure that it is guaranteed a profit!
Hi everyone. I’ve been off the political blogging grid for awhile now. But I just had to speak up about this healthcare thing.
Below is a DNC video that I recently was sent a link to. And this is some of how I feel about it…
I don’t claim to have any answers – just questions. So, here goes.
I could understand the Republicans being against Obama’s healthcare plan if they at least had a plan of their own. Do they?
Sometimes I wonder if our elected government has forgotten that they represent The “United” States of America…and that this issue is about LIVES not elections.
Okay, that wasn’t really a question, more like a statement.
And I’m totally NOT for taxing the top 2% of Americans to subsidize the 15% without insurance. But just out of curiosity…
Who are these people? The top 2% people? Are you one of them?
And how many of them would be totally against donating some of their wealth or business savvy (at least temporarily) to finding a way to help the uninsured of their own country?
Seriously. Did anyone think to ask? Maybe this population of our country isn’t as heartless and greedy as some people would like us to believe?
Anyway…Here’s the video from the DNC. What do you think about all of this? Dare I ask?
As the nation deals with the ongoing foreclosure crisis, Republicans and conservative thinkers have increasingly blamed the situation on the Community Reinvestment Act (CRA).Not only is this tactic a smokescreen for the real problems that we face, but it is also patently false.
CRA requires banks with branches in disadvantaged communities stop discriminatory practices called redlining. Redlining means that no matter what the credit worthiness of a borrow is, if he or she lives within certain boundaries, banks summarily dismissed their loan applications. While redlining is technically illegal, banks continued to practice it anyway. CRA said that if you want to do business in a community, you need to find ways to responsibly invest in it.One way to do so is to find credit-worthy borrowers and provide them with mortgages.This worked very well for over 30 years.
Although the Act’s critics claim otherwise, CRA does NOT mandate that banks lend to disadvantaged borrowers who are not credit-worthy, nor did it lead to banks lowering their underwriting standards to comply with the law. According to an independent study of 2006 mortgage loan data conducted by the law firm Traiger & Hinckley LLP, CRA actually deterred banks from engaging in the kinds of risky and subprime lending that brought on the foreclosure crisis. Specifically, the findings show that:
1. CRA banks were significantly less likely than other lenders to make a high cost loan;
2. The average APR on high cost loans originated by CRA banks was appreciably lower than the average APR on high cost loans originated by other lenders;
3. CRA banks were more than twice as likely as other lenders to retain originated loans in their portfolios; and
4. Foreclosure rates were lower in metropolitan statistical areas with greater concentrations of bank branches.
Whether one agrees with CRA’s mandate that banks responsibly serve the communities in which they accept deposits or not, the data shows that CRA actually deterred irresponsible lending.Further, the Treasury Department and the FDIC have emphatically stated that CRA is in no way responsible for the situation we are in today.
Instead of blaming CRA, we should extend CRA provisions to the independent mortgage companies and bank affiliates from which at least 75% of subprime loans originated.To continue to mislead the public on the benefits of CRA is not only immoral, but it would lead us into situation in which more – not less – of the irresponsible lending that created our current meltdown takes place.
So here are three major factors that contributed to our country’s world’s current financial misfortunes: prolonged periods of historically low interest rates (even negative real interest rates), the complete deregulation of such derivatives as credit default swaps, and encouragement from Washington that the inflated housing boom was nothing to worry about. It’s rare that you can pin so many large factors on one person, but, well, former Fed chief Alan Greenspan set the low interest rates, led the pressure on Congress to keep derivatives markets wholly deregulated, and was the voice from Washington that said everything was fine.
From Rachel Maddow…
I always felt like Allen Greenspan had some kind of “God Complex” when it came to the economy. I never understood why we gave one guy so much power over our economy (especially, for so long). It now seems obvious, that this was a bad idea.
What do you think? How much blame can be put on Greenspan for our economic crisis? Does he gets points for admitting he made a mistake? Let me know what you think in comments.
I’m getting pretty sick of the “Joe the Plumber” stuff. Joe isn’t even a licensed plumber, and he blatantly lied to Barack Obama, with his question on the economy. Now, the McCain Campaign is using this in negative ads. I don’t see how having more people “claim” to be Joe the Plumber, over and over, is a smart campaign move? And, this ad is just ridiculous. Let me know what you think in comments.
So…What are they saying? Are they just like Joe the plumber, who makes over $250,000.00 a year? Do they know that guy isn’t a licensed plumber and doesn’t make even close to the income he claimed, and he never had any intention of buying a small business? Do they know, that under Barack Obama’s plan, Joe the plumber would have his taxes lowered? Do they realize, that unless they have incomes greater than $250,000.00, their taxes would be lower too?
What do you think of all the “Joe the Plumber” hoopla? Are you sick of it? Let me know in comments.
So, what are the candidates plans for the economy?
Yesterday, the McCain campaign put out another “economic recovery” plan, that appears to push policies that will not benefit the middle-class at all. In fact, in a deceptive move, McCain is slipping in a policy that the Republicans have been trying to pass for years with no success. John McCain is claiming that capitol gains taxes need to be cut in half to help the economy. What? Maybe you think that’s no big deal, because most people haven’t made any capitol gains this year? Well, for one, if anyone did make capitol gains this year, they are the very rich (maybe even some of the same people that contributed to this mess). And, two, the economy will recover, and this is just another tax break for the rich, this will not help the middle-class one bit…Unless, you are still buying the whole trickle down thing.
Here is Rachel Maddow on the recent history of the McCain Economic Policy.
“Keating Economics: the Making of a Financial Crisis” is a documentary that shows why John McCain’s failed philosophy and poor judgment are a recipe for deepening the economic crisis.
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