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Despite our focus upon the tragic events of this past Saturday, the rest of the world keeps spinning--mostly in a diametrically opposite direction, and generally to the right--just like the pols' recent, ongoing talk of economic "recovery" in Washington D.C. On the economic front, much has come and gone unnoticed in the MSM and around the blogosphere since the tragedy in Tucson.

In particular, two articles have troubled me greatly (I reference a few more, farther down), primarily with regard to what they may mean in terms of the Obama administration's shift to the right since mid-terms.

The first, concerns  new "praise" for the Obama administration from none other than U.S. Chamber of Commerce President and CEO Tom Donohue. (This isn't a typo.) From The Hill, yesterday: "Chamber president pleased with new tone from White House."


Chamber president pleased with new tone from White House
By Kevin Bogardus and Peter Schroeder - 01/11/11 07:20 PM ET
The Hill Newspaper
Wednesday, January 12, 2011

In his annual State of American Business address, Chamber President and CEO Tom Donohue said the economy is picking up steam and is in much better shape today than it was a year ago, though the recovery remains fragile and uneven.

"Last year, we worried about a double-dip recession," Donohue said. "Today, we are cautiously optimistic recovery will continue and pick up steam as the year progresses."

Donohue predicted that the economy would expand by 3.2 percent in 2011, creating between 2.4 million and 2.6 million jobs. Growth of that size could lead to a roughly 1 percent drop in the unemployment rate...

I want to note that, IMHO, this is a particularly well-done (albeit short), even-handed piece of journalism.  And, just in case you had forgotten the recent history between the Chamber and Democrats, there's this from it...


...In the heated days before the election, the White House suggested the business group was using foreign-sourced money for its electioneering, a charge the Chamber said the administration offered no proof to support...

Donohue also praised the President's selection of Bill Daley as his new Chief of Staff, referring to him as a "real pro."

Which brings us to the second article of initial note, a post by M.I.T. economics professor and former International Monetary Fund chief economist Simon Johnson, over at his Baseline Scenario blog, from Sunday: "The Bill Daley Problem."

Johnson's the co-author of one of the most widely-heralded books on the many causes of our Great Recession, "13 Bankers." He's also written two of my most highly-referenced links in my posts within this community in the past 20 months: "The Quiet Coup," and our resulting, "Two-Track Economy." More recently, on December 30th, in the NY Times Economix blog, he sounded another warning that, in 2011, "Fresh Crises Loom in Europe and the U.S."

When it comes to the economy,  IMHO, this guy's as prescient as it gets. So, I strongly recommend a read of his commentary from this past weekend concerning Bill Daley.


The Bill Daley Problem
Simon Johnson
Baseline Scenario
January 9, 2011 at 7:43 am

...The Bill Daley Problem is completely bipartisan - it shows us the White House fails to understand that, at the heart of our economy, we have a huge time bomb...

--SNIP--

Bill Daley now controls how information is presented to and decisions are made by the president.  Daley's former boss, Jamie Dimon, is the most dangerous banker in America - presumably he now gets even greater access to the Oval Office.  Daley is on the record as opposing strong consumer protection for financial products; Elizabeth Warren faces an even steeper uphill battle.  Important regulatory appointments, such as the succession to Sheila Bair at the FDIC, are less likely to go to sensible people.  And in all our interactions with other countries, for example around the G20 but also on a bilateral basis, we will pursue the resolutely pro-big finance views of the second Clinton administration.

Top executives at big U.S. banks want to be left alone during relatively good times - allowed to take whatever excessive risks they want, to juice their return on equity through massive leverage, to thus boost their pay and enhance their status around the world.  But at a moment of severe financial crisis, they also want someone in the White House who will whisper at just the right moment: "Mr. President, if you let this bank fail, it will trigger a worldwide financial panic and another Great Depression.  This will be worse than what happened after Lehman Brothers failed."

Let's be honest.  With the appointment of Bill Daley, the big banks have won completely this round of boom-bust-bailout.  The risk inherent to our financial system is now higher than it was in the early/mid-2000s.  We are set up for another illusory financial expansion and another debilitating crisis...

In between, Johnson makes note of America's "...most dangerous government sponsored enterprises...the largest six bank holding companies: JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley. "

He points out that these six firms, as of Q3 2010, "...had assets worth 64 percent of GDP."  He also notes: "...assets in the big six at the end of 2006 were only about 55 percent of GDP.  And this is up massively from 1995, when these same banks (some of which had different names back then) were only 17 percent of GDP."


...The social costs of these banks - and their complete capture of the regulatory apparatus - are apparent in the worst recession and slowest recovery since the 1930s.

Paul Volcker gets it; no wonder he has resigned.  Mervyn King, governor of the Bank of England, gets it.  Tom Hoenig, president of the Kansas City Fed, gets it.  Elizabeth Warren, the tireless champion of consumer rights, gets it.   Gene Fama, father of the efficient financial markets view, gets it better than anyone.

Johnson notes that the idea of bringing a top banking executive directly from Wall Street in as Obama's chief of staff is "...beyond ludicrous." He forecasts that the results of ongoing support for taxpayer subsidies for our too-big-to-fail banks will be "devastating."

I strongly encourage you to read Johnson's entire post, linked up above.

And, if you do read the entire Johnson piece, then the following, from Forbes, by editor Robert Lenzner, becomes a must-read accompaniment: "US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages."


US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages
Robert Lenzner
Forbes Magazine
Jan. 12 2011 - 8:36 am

The giant US banks have been bailed out again from huge potential writeoffs by loosey-goosey accounting accepted by the accounting profession and the regulators.

They are allowed to accrue interest on non-performing mortgages " until the actual foreclosure takes place, which on average takes about 16 months.

All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a resullt, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off the books of the banks.

This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.

Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs...

Now, onto other important (IMHO) stories on our economy from the past four or five days...

UNEMPLOYMENT, GROWING INCOME INEQUALITY, THE ONGOING DESTRUCTION OF THE U.S. MIDDLE CLASS...

Late Sunday, across the pond, Ambrose Evans-Pritchard authored the following in the UK's Telegraph: "Deepening crisis traps America's have-nots."


Deepening crisis traps America's have-nots
Ambrose Evans-Pritchard
Telegraph
Sunday, January 9, 2011

The US is drifting from a financial crisis to a deeper and more insidious social crisis. Self-congratulation by the US authorities that they have this time avoided a repeat of the 1930s is premature...

Evans-Pritchard points out that, upon closer inspection, the highly-touted holiday shopping season results actually provided very significant support for the prescient observations of M.I. T. economist Simon Johnson's tome from mid-2009,  linked above.

In another reference to Dickens (much like Johnson), Evans-Pritchards calls it: "A Tale of Two Shoppers." The high-end retailers, such as Tiffany's, Nordstrom's and Saks did exceptionally well. The mid-range stores (Macy's, etc.), as the AP noted in the NY Times on Friday,  did so-so.  But, the discounters pretty much "languished," repeating the word the British columnist used to describe their performance. He continues, noting the political failure of the Federal Reserve's second round of quantitative easing...


...Such is the blighted fruit of Federal Reserve policy. The Fed no longer even denies that the purpose of its latest blast of bond purchases, or QE2, is to drive up Wall Street, perhaps because it has so signally failed to achieve its other purpose of driving down borrowing costs.

Yet surely Ben Bernanke's `trickle down' strategy risks corroding America's ethic of solidarity long before it does much to help America's poor.

The retail data can be quirky but it fits in with everything else we know...

Even a lead business/economy story in Tuesday's NY Times verifies the reality that the Fed's supposed  (QE2) "effort" to combat joblessness has, so far, done little more than to very modestly, at best (and even that's somewhat of a stretch), drive down borrowing costs.

At that point, Evans-Pritchard starts listing some details on "...everything else we know..."

--  Food stamp recipients now number 43.2 million, "...an all time-high of 14pc of the population."

--  The US Conference of Mayors has noted that visits to soup kitchens are up 24% for 2010 versus 2009.

--  643,000 homeless Americans, on average, seek shelter each night.  

--  "Positive" spin concerning jobs data, released last Friday, focused upon more than a net 100,000+ gain in jobs for the month (BLS' Household Survey), while most in the MSM totally overlooked another truth that the number of jobs actually contracted by 260,000, falling to 153,690,000 in the BLS' Establishment Survey.

--  The "...'labour participation rate' for working-age men over 20 dropped to 73.6pc, the lowest the since the data series began in 1948." But, as Evans-Pritchard also noted: "The only reason that headline unemployment fell to 9.4pc was that so many people dropped out of the system altogether."

--  Long-term unemployment (people out of work more than six months) is now at 42% of the total number of jobless, which is "...twice the peak of the early 1990s. Nothing like this has been seen since the World War Two."

And, it's here where Evans-Pritchard goes "there"...to the subject of income inequality.


The Gini Coefficient used to measure income inequality has risen from the mid-30s to 46.8 over the last quarter century, touching the same extremes reached in the Roaring Twenties just before the Slump...
...

...Extreme inequalities are toxic for societies, but there is also a body of scholarship suggesting that they cause depressions as well by upsetting the economic balance. They create a bias towards asset bubbles and overinvestment, while holding down consumption, until the system becomes top-heavy and tips over, as happened in the 1930s.

Evans-Pritchard notes that: "Multinationals are exploiting 'labour arbitrage' by moving plant to low-wage countries, playing off workers in China and the West against each other. The profit share of corporations is at record highs across in America and Europe..."

This truth fits like a glove with one of the top stories from none other than the voice of the U.S. status quo, Tuesday's Wall Street Journal: "Downturn's Ugly Trademark: Steep, Lasting Drop in Wages," by Sudeep Reddy. Kossack Tasini posted an excellent diary on this piece, and it was one of the most highly-rec'd diaries in this community, on Tuesday: "American Dream Done: WSJ--Steep, Lasting Drop in Wages."

Reddy notes that there are currently 14.5 million Americans that have been on our nation's jobless rolls for more than six months. He points out that: "Unemployment has stood above 9% for 20 straight months--longer than the early 1980s stretch--and is likely to remain above that level for most of 2011, putting downward pressure on wages."


Downturn's Ugly Trademark: Steep, Lasting Drop in Wages
By SUDEEP REDDY
Wall Street Journal Blog
JANUARY 11, 2011

...But the decline in their fortunes points to a signature outcome of the long downturn in the labor market. Even at times of high unemployment in the past, wages have been very slow to fall; economists describe them as "sticky." To an extent rarely seen in recessions since the Great Depression, wages for a swath of the labor force this time have taken a sharp and swift fall.
...

Many laid-off workers who have found new jobs are taking pay cuts or settling for part-time work when they get new ones, sometimes taking jobs far below their skill levels.

Economists had wondered how far this dynamic would go in this recession, and now the numbers are starting to show it: Between 2007 and 2009, more than half the full-time workers who lost jobs that they had held for at least three years and then found new full-time work by early last year reported wage declines, according to the Labor Department. Thirty-six percent reported the new job paid at least 20% less than the one they lost.

More than eight million Americans lost their jobs during the recent recession. Many are returning to the workforce--but in jobs that pay them far less than they used to earn.
...

The severity of the latest downturn makes it likely that many of the unemployed who get rehired will take wage cuts, and that it will be years, if ever, before many of their wages return to pre-recession levels, says Columbia University labor economist Till von Wachter. "The deeper the recession, the lower the wage you're going to get in the next job and the lower the quality of your next job," he says.

Yes, we've heard all of this many times--but without the Wall Street hubris injected into the propaganda telling us, for the foreseeable future, 'the middle and lower classes must suffer' while the upper class doesn't miss a meal or a dividend check--in recent weeks, haven't we? Here are a few links to some other, less recent, reality-based stories about these inconvenient truths...

-- "Career Shift Often Means Drop in Living Standards," Catherine Rampell, New York Times, January 1st, 2011

-- "Does Recovery Mean New Jobs at Lower Pay?" Mark Thoma, Economist's View, December 31st, 2010

-- "Alarming New Stats: Poverty Rate, Income Inequality Surging," Joan McCarter, Daily Kos/Alternet.org, September 16, 2010

--"America Without A Middle Class -- It's Not As Far Away As You Might Think," Elizabeth Warren, Alternet.org, December 9, 2009

Interestingly, over the past few days and in response to the Bureau of Labor Statistics' most recent employment report, announced last Friday, both Paul Krugman and University of Oregon Economics Professor Mark Thoma have made particular note of this chart, from the St. Louis Federal Reserve Bank/Branch: Civilian Employment-Population Ratio.  If nothing else, just some more food for thought.

ALTERED STATES...

Here's DDay, over at FireDogLake on Monday, telling it like it is in state budget hell: "Crushing State Budget Cuts Wiping Out Stimulative Effects of Tax Deal"


Crushing State Budget Cuts Wiping Out Stimulative Effects of Tax Deal
By: David Dayen
FireDogLake
Monday January 10, 2011 11:01 am

...In a state where the budget woes have, by some estimates, grown more dire than even those in California, it seems that months of inaction might at last be overtaken by some combination of timing (elections are far away) and fear (the state's national reputation and bond ratings seem to be sinking as fast as its debts are mounting).

In a moment when states around the country are wrestling with withered revenues, Illinois faces a deficit of at least $13 billion; more than $6 billion in unpaid bills to social service agencies, schools and funeral homes; the most underfinanced state pension system; and growing signs of concern from bond investors.

Between California and Illinois, you're looking at about $45-48 billion dollars to balance budgets, between tax hikes and program cuts. The anti-stimulative effect of that almost totally wipes out the $55-60 billion in stimulative measures that aren't just extensions of current law in the tax cut deal.

That's not a commentary on how the tax cut deal could have ended state budget crises (although an innovative policy solution could have at least put that in motion and at lesat begun to set up some counter-cyclical fund so states don't have to contract during recessions). It's more a commentary on how economic forecasters assumed major growth from this tax cut deal, even though it's almost entirely composed of poor stimulus and would be overwhelmed by budget cuts at the state and probably federal level. Austan Goolsbee likes to talk up the stimulative power of that tax cut deal, but he's looking at it in a vacuum. Fiscal policy in 2011 and 2012 is still very likely to be contractionary, and nobody in Washington is arguing for that to change. Vain hopes of "stimulus" seem very odd, in this context.

More on this from Zero Hedge: "More Bad News For States: State Revenue Plunges By 31% In 2009 To $1.1 Trillion As Spending Increases," 1/5/11

Meanwhile, Newt Gingrich is jumping into this fray HERE in,  "Newt Gingrich Pushing Bill To Allow States To File Bankruptcy Allowing Them To Renege On Pension And Benefit Obligations," Zero Hedge, 1/10/11


Some unpleasant news for pensioned workers who believe that their insolvent state will be able to afford ridiculous legacy pensions in perpetuity. According to Pensions and Investment magazine, Newt Gingrich is pushing for legislation that will allow insolvent states to be taken off bailout support and file bankruptcy, in the process allowing them to renege on pension and other benefit obligations promises to state workers. And if there is anything that will get government workers' blood pressure to critical levels, it is the threat that money they had taken for granted is about to be lifted, courtesy of living in an insolvent state (pretty much all of them). And obviously what this means for equity investors in assorted muni investments is that a complete wipe out is becoming a possibility, as Meredith Whitney's prediction, which everyone was quick to mock and ridicule, is about to come back with a vengeance.

HOUSING ECLIPSES DEPRESSION-ERA STATISTICS AS OUR COUNRY'S MORTGAGE AND FORECLOSURE CRISIS WORSENS...

Do I need to say anything about a new, brutal fact which speaks for itself? See: "Home price drops exceed Great Depression: Zillow."


Home price drops exceed Great Depression: Zillow
By Al Yoon
Reuters
NEW YORK | Tue Jan 11, 2011 8:40am EST

NEW YORK (Reuters) - Home prices fell for the 53rd consecutive month in November, taking the decline past that of the Great Depression for the first time in the prolonged housing slump, according to Zillow.

Home prices have fallen 26 percent since their peak in 2006, exceeding the 25.9 percent drop registered in the five years between 1928 and 1933, the housing data company said in a report on Monday. Prices fell 0.8 percent over the month.

It is a dubious milestone for the U.S. housing market which has failed to gain much traction despite a host of government programs to reduce delinquencies and encourage demand with temporary tax credits and lower interest rates. Many economists expect further price drops, even if there are some anecdotal signs of growing demand, such as in pending home sales data...

Here's Reuters' Felix Salmon making note of last Friday's Ibanez decision by the Massachusetts Supreme Court, which--as Joe Biden would say--is really "a big fucking deal." "The Ibanez case and housing-market catastrophe risk."

(I posted a diary about this story last week. The link's right HERE.)


The Ibanez case and housing-market catastrophe risk
Felix Salmon
Reuters' Blog
Jan 7, 2011 15:58 EST

The 16-page decision in the case of US Bank vs Ibanez does not make for easy reading. But it's a very important case: it's a solid precedent saying that if a bank doesn't own a mortgage, then it can't foreclose on a home. That was the decision of the lower court in Massachusetts, back in March 2009, and it has now been unanimously upheld on appeal to the Massachusetts supreme court.

After speaking to crack Reuters reporter Jonathan Stempel, I'm even more worried about this case than I was before...

Here are a couple more links to great, related coverage on a story, IMHO, you'll be reading about for years to come...

No Federal Preemption by a Trustee of a Mortgage Backed Security Trust from Senior Counsel of the Office of the Comptroller of the Currency, from 4closureFraud via Zero Hedge, 01/10/11

Massachusetts Ruling on Foreclosures Is a Warning to Banks, Gretchen Morgenson, NY Times, 1/7/11

SUMMING IT ALL UP...

You may have missed these three great pieces (like many other stories, above, all worthy of their own diary) from the past few days...

From Paul Krugman, over at his NY Times blog: "Economics and Morality," 1/10/11

Bob Herbert's scathing op-ed from this past Saturday's Times: "Misery With Plenty of Company," 1/8/11

And, last but not least, Frank Rich from the Sunday edition of the same paper: "Let Obama's Reagan Revolution Begin," 1/9/11

Please feel free to reference this post the next time you hear about our "improving economy," or when someone writes a piece about a gain in some tertiary economic indicator. I'm sure you'll then be told all about unemployment being a "lagging economic indicator" of a recovery (even if this time, according to the Congressional Budget Office, it's projected to "lag" for at least another five or six years).

Or, perhaps you'll be told all about how someone just sold their home at a profit, and they can't see what the fuss about ongoing declining home prices is all about.

Or, maybe, in response to a statement you might make about how we're now witnessing the greatest economic inequality between the social classes since the metric was first implemented by our government, many years before the Great Depression, someone will mention how their friend just landed a job after being unemployed for a year.

IMHO, at that point maybe then you'll realize that our economic recovery really has morphed into "a more insidious social crisis." That's the way it is sometimes when things degenerate to a point where the only thing left to maintain one's sanity is to focus upon hope for the future due to the fact that the present is so depressing for the 100,000,000 poorest in one's own country, few want to even talk about it.

Originally posted to http://www.dailykos.com/user/bobswern on Thu Jan 13, 2011 at 01:44 AM PST.

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Comment Preferences

    •  You never mention the 'wars', (11+ / 0-)

      which are really occupations and profit-centers. If suddenly the troops were all called home, would Wall Street/the beltway dollar suddenly collapse?
        I see this a fundamental difference between bYsh-obama depression and the '30's... but I don't suppose 6 banks owned 64% of the GDP during the actual Hoover administration.
        Thanks for all you do parsing and sorting- I've come to rely on your insights.

      Brian, please! Save your hippie BS for the winter months.

      by pawtucketpat on Thu Jan 13, 2011 at 02:14:52 AM PST

      [ Parent ]

      •  First, thanks for the nice sentiments (8+ / 0-)
        I will, more than likely, be making more frequent reference to our country's grossly-bloated defense budget in coming months...especially as cuts in SS and Medicare spending are formally added to the agenda, post-SOTU (in another week, give or take).

        "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

        by bobswern on Thu Jan 13, 2011 at 02:45:30 AM PST

        [ Parent ]

        •  More guns, less butter--but we'll do it civilly (2+ / 0-)
          Recommended by:
          Dump Terry McAuliffe, ohmyheck

          The trend started w/ Reagan, and it has now continued through its 5th presidency.  Someday, after it is probably too late, it will occur to the Beltway that a bloated military and an emaciated economy won't work much better here than it worked for the Soviets.  

          In hindsight, "Change" was, obviously, something of a political Rohrshach test.  It never occurred to me in 2008, however, that steady continued increases in MIC spending was the change that we would get.

          Some men see things as they are and ask why. I dream of things that never were and ask why not?

          by RFK Lives on Thu Jan 13, 2011 at 06:31:49 AM PST

          [ Parent ]

      •  BTW, I think Mr. Johnson is confused- Daley IS (1+ / 0-)
        Recommended by:
        House of Gin

        a defacto president. That other guy, the lawyer who tortures, signs Bob Dole HCR, etc? I call him the spokes-president.

        Brian, please! Save your hippie BS for the winter months.

        by pawtucketpat on Thu Jan 13, 2011 at 03:46:51 AM PST

        [ Parent ]

    •  In case people thought you were arguing against a (2+ / 0-)
      Recommended by:
      alizard, i like bbq

      straw man here is New Deal democrat who lives in a world where it is apparently always Christmas

      In the final months of 2010, there has been a palpable sense in the data - in the continuous decline of initial jobless claims, in the increase in consumer spending at Christmas, in the increase in car purchases, in the renewed vigor of manufacturing - of an economy that is trying to accelerate to lift-off. Indeed, I have noted several times recently that measuring the savings rate in real, inflation adjusted terms (blue in the graph below), seems to be an excellent precursor to economic growth several years after (red), and in that regard, there is an awful lot of tinder available to start the fire of a self-sustaining recovery

      But then the President's approval rating is at 48% so Christmas town seems a place half the population wants to live.

    •  "The time is out of joint . . . " (1+ / 0-)
      Recommended by:
      ohmyheck

      There is something definitely rotten in the metaphorical "State of Denmark" USA.

      Not unlike Esau, we have traded our birthright for a mess of plastic pottage.

      "Who am I to give science the brush?" Sugarpuss O'Shea

      by semiot on Thu Jan 13, 2011 at 05:27:32 AM PST

      [ Parent ]

  •  good survey (4+ / 0-)

    too bad there's a lack of good news, but better to know what's really going on.

    Noticed the phrase "green shoots" has disappeared from the political vocabulary?

    The most amazing thing about the current economic situation is that there are still Democrats that look at the 2012 election with optimism.

    Looking for intelligent energy policy alternatives? Try here.

    by alizard on Thu Jan 13, 2011 at 02:09:21 AM PST

  •  I'm completely fucking furious (18+ / 0-)

    with the whole "recovery" meme.

    Stocks are up. Corporations are making record profits.

    I'm sure I would be as pleased as punch or as happy as a pig in shit... if I owned a lodge in Aspen, a condo in Manhattan, a Mansion in the Hollywood hills, and my slummin' Summer home in the East Hamptons.

    I don't.

    This or that stock going up, or some Mega-Corp sitting on billions of dollars they refuse to spend, doesn't mean my life, or millions of other Americans lives, are getting any better.

    One of the things that absolutely drives me to want to break my tv is spending even a brief amount of time glancing at CNBC.

    If you are too batshit for Fox News business round table shows, and refuse to toil in absolute anonymity on Fox Business, here's the job for you.

    You can either

    a. kiss-kiss-kiss-kiss Larry Kudlow's ring, hand, foot, and ass,
    b. get yelled at or shouted down if you dissent from the Kudlow line by his minions/goons around you.
    c. sit silently while the Kudlow-ians try to out-Kudlow each other.

    And more than being castrated by the Movement Conservatives about "liberal bias", we have a growing threat to the social safety net in the Village outright joining with the GOP to cheerlead for austerity for the poor and tax cuts for the Rich.

    Millionaires are reading the news about what's best for the poor, and what's best for the poor is for them to be... poorer and less secure.

    Anderson Cooper is one of the Vanderbilt heirs, for Christ's sake. Andrea Mitchell is Mrs. Alan Greenspan.

    What the fuck do they know about people who are hovering above the Social Safety net wondering if there is going to be a big hole when they drop?

    If you don't need Social Security, or will never have to worry about being a paycheck away from outright homelessness, all of the suffering out here beyond the DC bubble, occurring out of your sight as a complete hypothetical, is an abstraction to you.

    Going to a ruined part of Detroit is as much as foreign junket as going to a third world country that is in ruins because of a disaster or because a government collapsed after the local economy shit the bed.

    Bill Daley got the nod, and if he got the job partially to signal to the business community that a more "pro-business" tone would be taken by the White House, the Chamber of Commerce promptly showed the Obama administration how much they appreciate a more "pro-business" voice being inside the White House by... promptly proclaiming they fully support the GOP's attempt to repeal healthcare reform.

    I'm proud of the policies and principles that are the foundation of the Democratic Party and what makes me a Democratic voter. If you can't trust the Democratic Party to look out for the middle class, the working poor, and the destitute poor, what the fuck is it good for?

    I'm not a Democrat because I'm an upper middle-class white Rockefeller country club Republican who got hounded out of the GOP by the Tea Party Right, I actually believe in the Social Safety net and see maintaining it as a National Security issue as well as the right thing to do.

  •  And the economy isn't the whole enchilada (10+ / 0-)

    What's more disconcerting is what becomes of the culture that was the Middle Class when its immune system against things like crime and food availability.  The poor already knows what its like to live hand to mouth, and for some in the feral cold.  Are we to descend, however slowly, toward that state once we've reached economical critical mass?

    The only way the GOP can win an argument is if they drive us all crazy, one by one, until there are no crazy people left.

    by Detroit Mark on Thu Jan 13, 2011 at 02:20:45 AM PST

    •  I have this theory (13+ / 0-)

      that Movement Conservatives, Corporatists, and their useful Freepi idiots (who are often middle class people who have been conned into voting against their best interests), simply don't actually believe that there is a socio-economic breaking point for the United States. No point where the middle class and the working poor can't just keep eating and eating and eating shit and keeping the whole medicine wagon rolling.

      It's kind of like listening to a rich guy blather on and on and on about his Ferrari, and suddenly realizing that you are talking to a man who actually believes, with an almost religious fervor, that the engine of his Ferrari simply cannot physically overheat and seize.

      It's madness. But until the engine seizes, it's a madness that enables you to behave as abusively as you want without a lick of fear of any consequences you personally might have to bear.

  •  Rest assured. (2+ / 0-)
    Recommended by:
    dkmich, blueoasis

    A slow (heh, heh) "recovery" and (heh, heh) "unemployment" of (heh, heh) "10%" will still be with us as we move closer and closer to looking like the world of Soylent Green.

    When you've truly lost everything, at least you become rich in loss.

    by dov12348 on Thu Jan 13, 2011 at 02:24:52 AM PST

  •  And the next imminent crash... (10+ / 0-)

    ...few are even talking about.

    The commercial real estate collapse.

    http://cop.senate.gov/...

    (Sorry about the formatting)

    Over the next few years, a wave of commercial real estate loan failures could threaten
    America’s already-weakened financial system.

    The Congressional Oversight Panel is deeply
    concerned that commercial loan losses could jeopardize the stability of many banks, particularly the nation’s mid-size and smaller banks, and that as the damage spreads beyond individual banks that it will contribute to prolonged weakness throughout the economy.

    Commercial real estate loans are taken out by developers to purchase, build, and maintain
    properties such as shopping centers, offices, hotels, and apartments. These loans have terms of
    three to ten years, but the monthly payments are not scheduled to repay the loan in that period.
    At the end of the initial term, the entire remaining balance of the loan comes due, and the
    borrower must take out a new loan to finance its continued ownership of the property. Banks
    and other commercial property lenders bear two primary risks: (1) a borrower may not be able to
    pay interest and principal during the loan’s term, and (2) a borrower may not be able to get
    refinancing when the loan term ends. In either case, the loan will default and the property will
    face foreclosure.

    The problems facing commercial real estate have no single cause. The loans most likely to fail were made at the height of the real estate bubble when commercial real estate values had been driven above sustainable levels and loans; many were made carelessly in a rush for profit.

    Other loans were potentially sound when made but the severe recession has translated into fewer
    retail customers, less frequent vacations, decreased demand for office space, and a weaker
    apartment market, all increasing the likelihood of default on commercial real estate loans. Even
    borrowers who own profitable properties may be unable to refinance their loans as they face
    tightened underwriting standards, increased demands for additional investment by borrowers,
    and restricted credit.

    Between 2010 and 2014, about $1.4 trillion in commercial real estate loans will reach the
    end of their terms. Nearly half are at present "underwater" – that is, the borrower owes more than the underlying property is currently worth. Commercial property values have fallen more
    than 40 percent since the beginning of 2007. Increased vacancy rates, which now range from
    eight percent for multifamily housing to 18 percent for office buildings, and falling rents, which
    have declined 40 percent for office space and 33 percent for retail space, have exerted a powerful
    downward pressure on the value of commercial properties.

    The largest commercial real estate loan losses are projected for 2011 and beyond; losses at banks alone could range as high as $200-$300 billion. The stress tests conducted last year for 19 major financial institutions examined their capital reserves only through the end of 2010.

    Even more significantly, small and mid-sized banks were never subjected to any exercise comparable to the stress tests, despite the fact that small and mid-sized banks are proportionately even more exposed than their larger counterparts to commercial real estate loan losses.

    A significant wave of commercial mortgage defaults would trigger economic damage that could touch the lives of nearly every American. Empty office complexes, hotels, and retail stores could lead directly to lost jobs.

    Foreclosures on apartment complexes could push families out of their residences, even if they had never missed a rent payment. Banks that suffer, or are afraid of suffering, commercial mortgage losses could grow even more reluctant to lend, which
    could in turn further reduce access to credit for more businesses and families and accelerate a
    negative economic cycle.

    It is difficult to predict either the number of foreclosures to come or who will be most
    immediately affected. In the worst case scenario, hundreds more community and mid-sized
    banks could face insolvency. Because these banks play a critical role in financing the small
    businesses that could help the American economy create new jobs, their widespread failure could
    disrupt local communities, undermine the economic recovery, and extend an already painful
    recession.

    There are no easy solutions to these problems. Although it endorses no specific proposals, the Panel identifies a number of possible interventions to contain the problem until the commercial real estate market can return to health. The Panel is clear that government cannot and should not keep every bank afloat. But neither should it turn a blind eye to the dangers of unnecessary bank failures and their impact on communities.

    The Panel believes that Treasury and bank supervisors must address forthrightly and
    transparently the threats facing the commercial real estate markets. The coming trouble in
    commercial real estate could pose painful problems for the communities, small businesses, and
    American families already struggling to make ends meet in today’s exceptionally difficult
    economy.

    When you've truly lost everything, at least you become rich in loss.

    by dov12348 on Thu Jan 13, 2011 at 02:41:38 AM PST

  •  There is no political will in Congress or this... (9+ / 0-)

    Administration to deal with the pain of the American people in this economy. All their thinking is top down and has been from the inception of this economic crisis. This is a political crisis and the result of the rightward drift of economic and political thinking in government and academia since the '80s. This year is not going to improve and if the EU weakens, which seems inevitable, the contagion will not be able to be stopped.

    The neoliberal idiocy of the "Rational Markets Hypothesis", DSGE modeling and the "Rational Actor Hypothesis", still maintain their sway over the status quo even though they have been proven non-predictive and non-descriptive. It's enough to make a cat laugh.

    Obama's administration isn't even pretending to be concerned with the destructive impacts of joblessness, poverty, homelessness, falling wages and unfair trade, they just keep pushing the same prescriptions because they don't have the imagination or courage to do anything else.

    I keep hearing rumblings of US equity market revaluation in the Spring, a price decline between 10 - 20%. European sources tell me that the Euro may be tiered and the Germans and French are not going to be able to continue their efforts to stabilize the Euro if Portugal, Spain and Italy follow Ireland. The real estate market in the US is moribund and the overhang of bad loans and bonds is past the critical mark. This year may make us yearn for 2008.

    "Intelligence is quickness in seeing things as they are..." George Santayana

    by KJG52 on Thu Jan 13, 2011 at 02:42:51 AM PST

    •  The moment it obviously was all about looting (7+ / 0-)

      the economy while driving its collapse was when Ayn Rand acolyte Alan Greenspan testified in Congress that the system had a fundamental flaw and no one did anything.

      In any rational universe, that would have been the call for analysis and change.

      Fortunately, according to String Theory, there is a universe in which it was a call for analysis and change and the result was the implementation of FDR's Economic Bill of Rights.

      Unfortunately, we're not in that universe.

      We kidnap. We torture. It's our policy. Embrace it or end it!

      by Mosquito Pilot on Thu Jan 13, 2011 at 04:34:04 AM PST

      [ Parent ]

  •  They will ritualize their grief for a few (8+ / 0-)

    while they continue to destroy millions of Americans for their personal enrichment and without shedding a tear.

    I know I'm repeating myself with the following comment, but to me, it is the heart of what happened in AZ and what is wrong with this country.  I don't want their phony bi-partisan smiles and pretty words, I want justice.
     

    Actions speak so much louder than words.  They gave away our jobs and won't fund unemployment.  They bailed out the banks but don't care how many people are losing their homes.  Americans can't afford health care and die for lack of insurance while Washington and every other industrialized country enjoys universal health care.  They can't wait to bankrupt the states, defund pensions, cut pay, destroy unions, and defund the schools while they pass more laws to put people in their for-profit prisons.  Endless funding for two endless wars, but we can't afford Social Security or free college for kids who won't be able to get jobs without it.  People are pissed off, and pissed off people do crazy shit.  If Reagan hadn't of destroyed the mental health system, maybe this shooter would have gotten help.  

    It isn't the rhetoric.  It is the deed.   Too many laws, too many cops, too many jails, and not a lick of justice anywhere.    

    Tip and rec. as always bob.   2010 was a record year for foreclosures, and it is hasn't peaked yet.   Oh but, it was a righteous speech.

    What we need is a Democrat in the White House.

    by dkmich on Thu Jan 13, 2011 at 02:59:58 AM PST

    •  recently unearthed blog posts from the (5+ / 0-)
      Recommended by:
      dkmich, blueoasis, DBunn, bobswern, Ginger1

      shooter (try Salon) said he was stressed about inability to find either a job or a girlfriend.

      The economy and toxic BS from the political right are among the stressors that will push the level of violence up in America. Violence is one of the side effects that result when the average level of human suffering is deliberately increased so a few may profit.

      Looking for intelligent energy policy alternatives? Try here.

      by alizard on Thu Jan 13, 2011 at 03:13:28 AM PST

      [ Parent ]

    •  "Everything is upside-down." (2+ / 0-)
      Recommended by:
      dkmich, bobswern

      "Just look at us. Everything is backwards. Everything is upside-down.

      Doctors destroy health, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the major media destroy information, and religion destroys spirituality."

      ---Michael Ellner

      "A true patriot is a lover of his country who rebukes and does not excuse its sins"- Frederick Douglass

      by ohmyheck on Thu Jan 13, 2011 at 07:51:48 AM PST

      [ Parent ]

      •  Truer words... (0+ / 0-)

        So why would this be any different?  

        What we need is a Democrat in the White House.

        by dkmich on Fri Jan 14, 2011 at 03:26:07 AM PST

        [ Parent ]

        •  Ya. I tried to make this (1+ / 0-)
          Recommended by:
          LeftOverAmerica

          quote my sig line, but it is too long.

          I have said to more than one person, "We are living on the planet of mass-insanity."

          But then again, my favorite bumpersticker is:

          "Save the Earth.  It's the only planet with chocolate."

          Hmmmmm, maybe I just found yet another conspiracy theory.

          Chocolate----insanity----chocolate----insanity----

          Stay AWAY from the chocolate, People!!!!! It is making you crazy!

          "A true patriot is a lover of his country who rebukes and does not excuse its sins"- Frederick Douglass

          by ohmyheck on Sat Jan 15, 2011 at 08:07:01 AM PST

          [ Parent ]

  •  Sleepless in Tucson, (6+ / 0-)

    4AM, what better than to read your diary, your links and the links in those links ? I'd like to hear the President "go there", just once, put the words "income inequality" or "Gini coefficient" in one of his fine speeches. Fat chance.

    When a President goin' through the White House door does what he says he'll do, we'll all be drinkin' that free Bubble-Up and eatin' that Rainbow Stew - Merle

    by Azazello on Thu Jan 13, 2011 at 03:51:55 AM PST

  •  Full employment in JUST 1 MONTH (2+ / 0-)
    Recommended by:
    bobswern, ohmyheck

    It's easy.  Just use the measurement system to its full advantage--
    -Fire everyone tomorrow and move their jobs offshore
    -Everyone reports that they have quit looking for work

    If no one is looking for work, no one is unemployed.

    Simple!

    We kidnap. We torture. It's our policy. Embrace it or end it!

    by Mosquito Pilot on Thu Jan 13, 2011 at 04:27:17 AM PST

  •  there's a even bigger potential Daley problem (6+ / 0-)
    Recommended by:
    semiot, DBunn, mcc777c2, bobswern, Justus, ohmyheck

    take a look at Yves Smith's latest...

    We’ll analyze a proposal to fix the foreclosure mess put out by a DC think tank known as Third Way. Normally this blog steers clear of delving into random policy documents. In this case, though, it is likely that Third Way is speaking for the administration.

    Third Way is an influential think tank whose board is composed of a special Wall Street-type – the Rubin Democrat. These people sit at the nexus of politics and finance, and are conduits for big bank friendly information flow into the administration and Congress. The President of the think tank, Jonathan Cowan, was the Chief of Staff for Andrew Cuomo at HUD in the 1990s, and Third Way is well known in policy circles for delivering ‘politically safe’ and well-packaged conventional wisdom. Oh, and one more thing – the new White House Chief of Staff Bill Daley, who just left the most senior operating committee of JP Morgan, was on their Board of Directors.

    http://www.nakedcapitalism.com/...

    I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's. - Mark Twain

    by route66 on Thu Jan 13, 2011 at 05:09:04 AM PST

  •  Nationalizing the Foreclosure crisis? (5+ / 0-)
    Recommended by:
    route66, semiot, Sandino, Justus, ohmyheck

    A long time ago, I stated that I thought DC would write laws invalidating state real estate law for the express purpose of making banks whole at the expense of law, investors, and homeowners. Looks like the first step in this process has been taken. Aren't we fortunate that Bill Daley, Obama's new chief of staff, was on the board of directors that produced this wonderful idea?
    From Naked Capitalism
    "Third Way is an influential think tank whose board is composed of a special Wall Street-type – the Rubin Democrat. These people sit at the nexus of politics and finance, and are conduits for big bank friendly information flow into the administration and Congress. The President of the think tank, Jonathan Cowan, was the Chief of Staff for Andrew Cuomo at HUD in the 1990s, and Third Way is well known in policy circles for delivering ‘politically safe’ and well-packaged conventional wisdom. Oh, and one more thing – the new White House Chief of Staff Bill Daley, who just left the most senior operating committee of JP Morgan, was on their Board of Directors."
    Read the whole article here:
    http://www.nakedcapitalism.com/...
    Another key quote from the aricle
    "This proposal guts state control of their own real estate law when the Supreme Court has repeatedly found that "dirt law" is not a Federal matter"

    If only we had an expert in constitutional law as President, then proposals to change the law to give cover to the biggest fraud of our lifetime wouldn't even be considered. Just like torture, illegal search and seizure, and domestic spying wouldn't be tolerated.

  •  Still don't know how to read a report, do you? (1+ / 0-)
    Recommended by:
    faster democrat kill kill

    Regarding this comment:

    "Positive" spin concerning jobs data, released last Friday, focused upon more than 100,000 people finding employment, while most in the MSM totally overlooked the truth that the number of jobs actually contracted by 260,000, falling to 153,690,000.

    Let's look at the data.  The line you quote is not for jobs, but for the total civilian labor force.  In fact, according to the same report -- the household report which you still get confused by -- total employment increased by 297,000.

    For a man who "regularly consults with the largest financial institutions in the country" you really don't know anything about the reports, do you, Bob?

    "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

    by bonddad on Thu Jan 13, 2011 at 06:40:04 AM PST

    •  Reference was to net gain in the household (0+ / 0-)
      ...survey. But, there's a sentence missing.

      So, thanks for pointing that out. When you learn how to do this without injecting your ego into the mix, let me know.

      But, thanks for the backhanded point which I'll now correct. (Obviously, I was referring to net pickup in jobs in the appropriate survey. And, the source material, from which this was pulled, describes it as such, attributing it properly.)

      There are multiple diaries where I review the differences between the two surveys for the benefit of the comunity.

      So, your misguided criticism--once again--is ill-founded.

      Then again, with you attributing the comments of others to me, directly, as if I said them, myself, I can understand how you'd never miss an opportunity to attempt to discredit.

      I'm looking forward to seeing your rant about this behind my back. Something I've noticed you've done on multiple occasions--usually with ad homs--within your own blog over the past 16 months.

      Or, better yet, call me out in your own post, right here. (Another one of your tactics.)

      In the meantime, again, thanks for pointing this out!

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Thu Jan 13, 2011 at 07:30:45 AM PST

      [ Parent ]

      •  No Bob (1+ / 0-)
        Recommended by:
        faster democrat kill kill

        you've been claiming to be an expert who counsels the large companies and has been involved with economics for 20+ years.  Yet you still don't know how to read a basic economic report.  This is not rocket science, Bob.  This is information reading 101 - and you failed (again).

        "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

        by bonddad on Thu Jan 13, 2011 at 07:45:59 AM PST

        [ Parent ]

        •  Now this is the old Bonddad I know! LOL! (0+ / 0-)
          The fact is, I don't wear my work outside of the community on my sleeve. And, I don't appreciate the personal attacks, but I'm used to them.

          I currently have my company's retail finance management software running in your town in over a dozen locations, managing roughly $20 million in transactions in Houston, alone. (That's not a "claim," it's a fact.) I'm NOT an economist, nor do I pretend to be one. But, I do provide guidance to retailers around the country, and to folks on Wall Street, concerning the state of retail finance in this country (on an ongoing basis). This includes working with most of the TBTF's on an almost daily basis, as well.

          Your most recent "attack," if I recall, was someone attributing Simmons' (R.I.P.) comment about BP going into bankruptcy in 30 days to me, directly, as if I said it, myself, when what I did was use his quote (attributed as such) in a diary.

          Save this bullshit for another attack diary, or one of your ad hom rants about me, behind my back, on your blog.

          Last time I checked, despite the fact that I've only read your blog two or three times (EVER), you announced to your crowd that I was "banned" there. ROFLMAO! (Funny, I thought one had to register or attempt to register to be "banned.")

          Speaking of banning, ongoing personal attacks are a bannable offense in this community, last I checked.

          "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

          by bobswern on Thu Jan 13, 2011 at 08:11:47 AM PST

          [ Parent ]

          •  It's not a personal attack Bob (0+ / 0-)

            It's a fact.  You have stated over and over again that you are a 20+ year expert.  Yet, you can't read basic economic data -- data that those of us in the business read everyday as it comes out.

            This is not a complicated formula, Bob.  This is simple data reading.  And you failed.  Completely.  Again.  In other words, your own actions have demonstrated you are not competent to engage in rudimentary economic analysis.

            BTW -- didn't Bank of America hit a new high recently -- an event which directly contracts yet another completely wrong prediction on your part?  Sorry -- I forgot -- demonstrating to people that you don't know what you're talking about is a personal attack.  You and Ms. Palin share something in common ....

            "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

            by bonddad on Thu Jan 13, 2011 at 08:45:28 AM PST

            [ Parent ]

            •  Now this is just funny, in a perverse sort of... (0+ / 0-)
              ...way, with the bullshit starting from your comment headers and going downward from there.

              Bank of America, were it not for the efforts of our government to backstop them with taxpayer funds regardless of the cost to our society as a whole, is insolvent.

              Then again, I'm talking to a self-acknowledged "defender of Wall Street." So, I must continually remember to consider the source.

              And, your numbers are off. I've been working in Democratic politics and financial services for over 30 years, not 20. (With the past 10 in financial services, primarily. The previous 20+ focused much more upon Democratic politics than finance. Although, as early as 1982, I did publish the first stock market newsletter on the S&P 500 Index...even ran space ads in Barron's the week the index premiered...almost forgot about that one...hmmm....but, I've been writing on behalf of numerous Democratic pols on all matters, including the economy, since 1978, when I was 21. Yeah, I'm getting old.)

              Your comments do more to support my own than anything I could add to this. In other words, your behavior speaks for itself.

              Where did you get your economics degree, again? The University of Nowhere, with a Masters Degree in Upward-Pointing Arrows, and Cutting and Pasting Government Charts?

              You know, I digress...now I'm stooping to your level...I think this will be my last response to you in this thread.

              "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

              by bobswern on Thu Jan 13, 2011 at 09:27:49 AM PST

              [ Parent ]

              •  After 30 years in financial services (1+ / 0-)
                Recommended by:
                faster democrat kill kill

                you still can't read the standard, run of the mill BLS employment release?  And you took out ads in Baron's and still don't know how to read a simple economics report?  Really?  Is that the answer you're sticking with?  That's beyond the pale of sheer incompetence.  

                In case you are wondering, I'm a Chartered Asset Manager and Chartered Wealth Manager from the American Academy of Financial Management -- where I'm an honorary adviser (see F. Hale Stewart on the link).  One of the requirements is that we can read economic news releases ....

                "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

                by bonddad on Thu Jan 13, 2011 at 12:25:25 PM PST

                [ Parent ]

              •  Tell me about your investment letter Bon (0+ / 0-)

                inquiring minds want to know.

                What was it's name?

                How long did it run?

                What was your primary method of analysis?

                What was your track record -- that is, would your subscribers have made money?

                How many subscribers did you have?

                Do you have any copies you can send to me?  I'd love to read them.

                "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

                by bonddad on Fri Jan 14, 2011 at 04:43:51 AM PST

                [ Parent ]

              •  The week what index premiered? (0+ / 0-)

                Bob, if you really ran ads the week the S&P 500 premiered I am quite impressed and take back much of what I have argued with you about.

  •  Thanks. (1+ / 0-)
    Recommended by:
    bobswern

    "In the race between secrecy and truth, it seems inevitable that truth will always win" - Rupert Freaking Murdoch circa 1958

    by blueoregon on Thu Jan 13, 2011 at 07:22:56 AM PST

  •  The current recession (2+ / 0-)
    Recommended by:
    bobswern, Azazello

    is certainly nothing but a surface manifestation of the deeper more pervasive 21st century social crisis.  A simple way to think of the social structure of the 21st century is to think of the most aggressive, rapacious period of Euro-American capitalism, roughly 1870-1929, without any elements of what was then the historical class challenge represented by the labor and socialist movements.  instead, in much of the capitalist world, particularly the US, we see the spectacle of a large and growing portion  of the working class in a frenzy demanding an even more exploitative and pervasive hegemony of capital.  That's one working class demand that we can be quite certain will be fulfilled!

    Hegemony is always electable.

    by ActivistGuy on Thu Jan 13, 2011 at 07:34:47 AM PST

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