Thursday, June 30, 2011

Krugman: If Obama caves, it's 'the end of his presidency'

By Paul Krugman
June 28, 2011 | New York Times blogs

So, here's where we are on the debt limit discussions: Democrats have agreed to large spending cuts, but are holding out for doing something about

a rule that lets businesses value their inventory at less than they bought it for in order to lower their tax burden, a loophole that lets hedge-fund managers count their income as capital gains and pay a 15 percent marginal tax rate, the tax treatment of private jets, oil and gas subsidies, and a limit on itemized deductions for the wealthy.

And Republicans walked out.

Think about it. There's a significant chance that failing to raise the debt limit could provoke a renewed financial crisis — and Republicans would rather take that chance than allow a reduction in tax breaks on corporate jets.

[Don't forget tax breaks for yachts and thoroughbred horses, and taxpayer-funded subsidies for mega-profitable oil and gas companies! - J]

What this says to me is that Obama cannot, must not, concede here. If he does, he's signaling that the GOP can extract even the most outrageous demands; he's setting himself up for endless blackmail. A line has to be drawn somewhere; it should have been drawn last fall; but to concede now would effectively mean the end of the presidency.

AP: U.S. nuke evacuation plans 'will not work'


Did you know this?

"— Four million people now live within 10 miles of the 65 operating sites. (Population in overlapping zones was counted only once for this part of the analysis.) Back in 1980, with 38 nuclear sites, only 1.5 million people lived that close.

— Overall, from 1980 to 2010, the average population in the 10-mile evacuation zones ballooned by 62%, from 39,762 to 64,363.

— Populations within the 10-mile radius have more than doubled at 12 of the 65 sites during the same 30-year period.

— The most explosive growth occurred around the two-reactor Saint Lucie complex near Fort Pierce, Fla., where the 10-mile population of 43,332 in 1980 grew 366% to 202,010 in 2010. Others in the top five: the two-unit Brunswick complex near the North Carolina coast, which increased 326% from 8,164 to 34,782; Monticello, 35 miles from Minneapolis, where population rose 314% from 14,130 to 58,538; the two-unit Turkey Point site, 20 miles south of Miami, up 302%; and the two-unit San Onofre facility in San Clemente, Calif., up 283%.

— Among newer reactors, the biggest jump occurred around Shearon Harris, 20 miles southwest of Raleigh, N.C., where population nearly quadrupled from 24,700 in 1990 to 94,465 in 2010. Three other facilities where populations more than doubled during the same 20-year period are the three-unit Palo Verde site, 50 miles west of Phoenix; two-unit McGuire site, 17 miles north of Charlotte, N.C., and the two-unit Catawba complex in South Carolina, 18 miles south of Charlotte.

About 120 million people, almost 40% of all Americans, live within 50 miles of a nuclear plant, according to the AP's analysis of 2010 Census data."

What's worse, the emergency evacuation plans in cities with nuclear plants are out-of-date, unrealistic, and untested. Take Indian Point near New York City, for example, where two plants operate:

"If a 50-mile order were ever issued for Indian Point, it would take in about 17.3 million people — 6% of all Americans, according to an AP population analysis. That would include parts of New Jersey and Connecticut and all of New York City, except for a chunk of Staten Island.

"'At no time in the history of man has anyone tried to move 17 million people in 48 hours,' said Kelly McKinney, New York City's deputy commissioner of preparedness."


June 27, 2011 | USA TODAY

Rand Paul: Let old people starve

Yes! That's my Senator. And no, you can't have him.

Go get 'em, Rand! Go get those hungry old folks stealing from taxpayers, you heartless nutjob! Doing nothing is real compassion; it helps people realize how cruel and individualistic the world is, so that they get with the program.


By George Zornick
June 21, 2011 | The Nation

Tuesday, June 28, 2011

Hip, cool Apple employees fed up, want a union

Think unionization in a retail- and service-based economy is irrelevant? If employees at a hip and cool place like Apple stores want to unionize, then unions are relevant everywhere.


Apple Store Workers Share Why They Want to 'Work Different'

By Josh Eidelson
June 24, 2011 | In These Times

URL: http://inthesetimes.com/working/entry/11557/apple_store_workers_share_why_they_want_to_work_different/

Thursday, June 23, 2011

'So...' what?

This is not a political observation, for a change, but... since when did Americans start ending every declarative sentence with "so" + ellipsis? Have you noticed this too? Thankfully, I'm not the only one.

As in, "They've really been flaring up lately but the Preparation-H seems to be helping, so...."

Or, "She's never said anything about it but she looks like Peppermint Patty and idolizes Melissa Etheridge, so...."

Are Americans becoming too spineless to say what they really mean?

Folks, stop trailing off! "So..." is not a punctuation mark.

Here is a proper declarative statement: "Anthony's [Weiner's Twitter] accounts were obviously hacked." Period. No question. End of story.


(OK, so maybe that was a little bit political.)

'Ideological slander'? Euro-socialist stocks outperform U.S.

"Countries with typically high levels of government involvement in the economy, such as Sweden, Denmark and Canada, do not appear to have experienced stifled economic growth relative to countries where government involvement is more limited, like the US," according to a report by Stewart Partners.

Indeed, "many socialized governments provide critical support for business growth, including first class infrastructure built by the public sector, retraining of workers and public education systems that result in better-prepared workforces, comparative to the US."

This shouldn't come as a surprise, I mentioned it back in July 2010: "On four broad categories of economic freedom -- (1) legal structure and security of property rights; (2) access to sound money; (3) freedom to trade internationally; and (4) regulation --. the United States was slightly 'freer' than Sweden, the United Kingdom, Austria, Finland, and Switzerland. Meanwhile, Ireland, the Netherlands and, by a wide margin, Denmark were found to have freer markets."

See for yourself in the annual report on Economic Freedom of the World by the libertarian, Koch-funded CATO Institute to see how countries measure up.

Just remember: there is not a clear correlation between economic freedom and the relative size of the government's role in the economy.

Tax holiday won't create jobs, won't cut deficit

A nonpartisan congressional committee found that this tax repatriation plan would actually cost the government $78.7 billion over ten years, as companies scored a great deal on cash they planned to bring back to the country eventually anyway.

"What's more, an April analysis from the Center on Budget and Policy Priorities found that 10 of the biggest players in the WinAmerica Coalition are sitting on a combined $47 billion in domestic cash. If the companies aren't using their excess U.S. cash to create jobs, they aren't very likely to spend any money they bring in from overseas on jobs, either."

"According to a 2008 report by the Government Accountability Office, 83 of the 100 largest American companies operate subsidiaries in nations identified by the GAO as tax havens. Of the 10 companies currently lobbying hardest for the tax holiday, four -- Apple, Cisco, Microsoft and Pfizer -- were noted in the GAO report. Those four companies operated a combined 572 sub-companies in tax shelter countries at the time the report was published."

So why does this bad idea have legs? Because the so-called WinAmerica Coalition has spent $13.7 million lobbying for it.


By Zach Carter and Paul Blumenthal
June 22, 2011 | Huffington Post

Joblessness is the real crisis; ICT is the answer?

Not sure I agree 100%. Businesses are already embracing technology during the Great Recession -- to replace U.S. workers. And the U.S. visa system is already being used and abused to bring in cheap labor, mainly from India, again to replace U.S. workers. And U.S. education badly needs reforming, but not, as pundits often say, to increase the number of America's STEM graduates -- there are already plenty -- but rather to develop solid vocational training.

For this to work, the key word is "transformational" technology. And immigrants have to be highly skilled, not low-paid.

Many argue that the U.S. economic miracle of the Clinton years -- high growth, low unemployment, and low inflation -- was thanks to the Internet bubble. Ten years on, the huge economic gains from the Internet and other ICT innovations are undeniable, the kooky dot-coms are gone, and the stronger companies continue to survive and flourish.

Is this innovation boosting U.S. productivity and corporate profits? For sure. But I'm still not convinced this = transformational change that can replace lost U.S. jobs in housing, autos, and other manufacturing.


By Chris Farrell
June 20, 2011 | Bloomberg Businessweek

The risk of economic stagnation should dominate discussions this week among the voting members of the Federal Reserve Board at its two-day meeting. Without dramatic action, the U.S. confronts an uncertain future—one that suggests "Americans on average would experience slower gains in living standards than did their parents and grandparents," according to consultancy McKinsey & Co.

The catastrophic danger is not the federal debt/deficit issue that dominates the current debate in Washington and in hyperventilated news reports on cable TV. It is employment. The once-great American job machine badly needs repair. Even before the Great Recession struck, total employment growth from 2000 to 2007 amounted to less than half the increase reached in preceding decades. That was the worst performance since the Great Depression. Three years after the recession officially ended in June 2009, some 24.6 million people are unemployed, underemployed, and marginally employed, according to the latest figures from the U.S. Bureau of Labor Statistics. It will take at least 21 million net new jobs over the coming decade to return to a 5 percent unemployment rate, according to McKinsey.

Sad to say, it appears that America's monetary mandarins are set on avoiding bold action, content to cross their fingers and hope that the current slowdown is nothing more than a soft patch. That so many policymakers are complicit in the sorry state of the nation's job market is risking a long-term, Japanese-like stagnation of dashed dreams and pinched opportunities. It doesn't have to happen. It shouldn't happen. But it could.

REMEMBER THE '90S—AND GET MOVING

Maybe that's why it was briefly heartening when Republican Presidential candidate Tim Pawlenty called for 5 percent gross domestic product growth over a decade. The problem is that his plan has been widely and justifiably panned for relying on tax cuts that would roughly double the size of America's already disastrous long-term fiscal gap. Although no one really knows the economy's speed limit, University of California, Berkeley economist Brad DeLong makes a realistic case for an "optimistic-aspirational 3.8 percent growth rate," while Stanford University economist John Taylor manages to hit 4.7 percent. Here's the thing: Despite growing gloom about the economy's growth prospects in the Wall Street-to-Washington power corridor, it wouldn't take much to improve the odds of a much brighter future. Policymakers should remember the lessons of the '90s.

Specifically, in the early 1990s most forecasters assumed the economy could expand at a 2 percent to 2.5 percent rate before igniting inflationary pressures. The GDP growth outlook was based on consensus projections of 1 percent average annual productivity growth and labor force growth of 1.3 percent or less. Yet, powered by an emerging web of technological and commercial innovations, the productivity growth rate ran at more than double expectations, starting in the mid-'90s. What's more, putting out the welcome mat for immigrants energized everything from high-tech innovation to urban renewal. By decade's end, the unemployment rate had dropped to 4.2 percent and inflation was averaging 2.2 percent—figures not seen since the 1960s.

The information technology universe is stirring after a long pause that followed the dot.com bust. The gains reflect the rise of social media and the spread of the mobile Internet, from Facebook to the Apple (AAPL) iPad. Unfortunately, much of the discussion seems dominated by worries about a second digital-age bubble, rather than the spread of underlying innovations.

FOCUS ON TRANSFORMATION, NOT BUBBLES

In many sectors of the economy, very smart people are working with extremely powerful computers to mine enormous troves of data. They aim to discover patterns that might suss out inefficiencies in a corporate supply chain or convince a consumer to click for a product. Prospects are ripe for using information technologies to boost productivity in health care, education, media, the government, and other services. It takes time for major technological innovations to spread throughout an economy. For example, computers are commonplace in the workplace, yet the PC is only three decades old. As recently as the 1980s, many users at work needed to do some of their own software programming to take advantage of the technology. Yet the average worker today doesn't need to know programming and can still do very sophisticated operations with the tap, tap, tap of a finger. What's true for workers holds for companies and industries. "And as the laggards catch up, the leaders will have moved on, using the large and ever-growing tool kit of digital technology to make improvements elsewhere," MIT information technology scholars Andrew McAfee and Eric Brynjolfsson write in an essay published at McKinsey's website: "The Digital Revolution Will Transform the Economy—Again and Again."

What can be done to accelerate the process? In the short run, forget tax cuts. The Fed should continue to support the economy with monetary ease. Legislators could embrace emergency infrastructure projects that bring long-term economic value and take advantage of cheap labor and cheap capital—especially investments in 21st century information technology and energy initiatives. Regulators should quickly get out of the rule-making weeds of the information technology ecology. The welcome mat could go out to legal immigrants. Long-term, there's much more to do to boost economic fundamentals, particularly when it comes to education. But for now, avidly embracing the digital frontier is the best prospect the U.S. has for generating the kind of growth that creates jobs.

10 firms get 25% of all USG contract money

Yep.


By Neil Gordon
June 21, 2011 | Project On Government Oversight

The federal government awarded $537 billion in contracts to more than 300,000 entities last year. However, as AllGov recently reported, about 25 percent of that amount went to just 10 companies –- Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, Raytheon, United Technologies, L-3 Communications, Oshkosh Corporation, SAIC, and BAE Systems -–the top 10 federal contractors in FY2010. The fact that these companies are primarily defense contractors isn't surprising given that the Department of Defense typically accounts for two-thirds to three-quarters of all contract spending each year.

[...]

Explore the misconduct profiles of the top ten federal contractors in POGO's Federal Contractor Misconduct Database.

Wednesday, June 22, 2011

GOP refuses to cut subsidies for rich farmers

Those brave Republicans in the majority decided the best way to tackle runaway spending was to keep intact farm subsidies for poor farmers like Michelle Bachmann who are scraping by on $1.25 million a year.

Do the Tea Parties care?  Does anybody?  Hello?  Hello?  (Crickets chirping)


By Philip Brasher
June 17, 2011 | DesMoines Register

The revenue scam that is NCAA Div. I sports

Some amazing takeaways from these two economic analyses, which I stumbled upon:
Texas which generates on average almost $50 million a year, has seen incredible sustained growth. In 2003, their profit margin was $34.6 million. In the year 2009? $68.8 million!
Amazingly the state of Alabama is at the top for college football revenue, though the state remains generally poor in GDP/GSP related measures.
Unfortunately, this is the sad truth:
In fact 40 teams averaged a loss in money through football over the 7-year period. It's no wonder that some schools are willing to travel into SEC country year in and year out for a hefty payday even though its [sic] another guaranteed loss. 
Women's sports lose money and only men's basketball/football are profitable.
So you could say that NCAA Division I sports are a microcosm of America: a lot of wealth distributed extremely inequitably, but nobody objects because they hope their winning lottery ticket is coming any day, too. Meanwhile, everybody is distracted by televised glam and spectacle and trying to rub elbows with the super rich.


By Vipul Lugade
March 24, 2011 | Matlab Geeks


By Vipul Lugade
March 30, 2011 | Matlab Geeks

Monday, June 20, 2011

Is college worth it?

It's clear that a college education pays dividends in the long term, historically speaking, but something new has been afoot since the '80s: the cost of college has tripled.

Meanwhile, more and more students are saddled with huge debts upon graduation. They optimistically take on those debts with promises from colleges that their lifetime earnings will more than compensate them.

You know, when evaluating business schools, it's quite common for graduates to look at the return on investment (ROI) of two years of education expenses, based on average starting and lifetime salaries of graduates of a particular business school. Indeed thinking in terms of money and payoffs jibes with a business education. Yet we need more of that in other academic disciplines, including the Humanities. Because undergrad students are spending about the same amount of money on tuition and getting drastically different ROI. They deserve to know what they're in for, no sugar-coating it.


By NPR Staff
June 18, 2011 | All Things Considered

Dan Rather: Guest visas at U.S. workers' expense

More people need to know about this, as we try to devise policies to lower current 9 percent U.S. unemployment:

"According to U.S. Department of Labor, a guest worker visa known as H-1B for 'specialty occupations' especially tech workers -- may be issued 'even when a qualified U.S. worker wants the job.' In fact, the bulletin notes, 'A U.S. worker can be displaced from the job in favor of the foreign worker.'"

"The federal government doesn't have any official counts of the guest worker population. Estimates put the current number of H-1B visa holders alone somewhere between 600,000 and 1,000,000. In recent years, U.S. corporations have been using an ever-proliferating array of temporary visas to import foreign labor -- including visitor visas, which as we reported in a recent Dan Rather Reports, are not supposed to be used for any purpose involving gainful employment."


By Dan Rather
June 17, 2011 | Huffington Post

Celebrating failure: Failed States Index 2011

I thought this was sad yet funny: "If the Failed States Index were a championship, then Somalia would be the undisputed four-time champion (or cellar-dweller, depending on how you look at it)." 

Keep at it, Chad! 2012 could finally be your year!

It's just as sad to see that two wards of U.S. power, Afghanistan and Iraq, are the 7th and 9th most likely to fail states, respectively. Sorry, U.S. taxpayers, we can't cut and run yet!

But it's perplexing to see that Libya is the 111th most likely to fail state, right after Ukraine at 110. Does that mean The Fund for Peace and Foreign Policy magazine don't think Gaddafi's going anywhere? You have to be a subscriber to see their methodology.

Maybe it will relieve you alarmists out there to see that the USA is in a respectably fail-proof 158th place this year, despite imminent default on its debt and hyper inflation. You've got to hang on until 2013, folks, then Mitt will save the day!

It's also useful for Nervous Nelly tourists planning their next getaway to know that drab, godless Euro-socialists Denmark, Switzerland Sweden, Norway and Finland are the least likely states to fail this year. Don't worry, your hotel reservations are safe!


June 20, 2011 | The Fund for Peace

Saturday, June 18, 2011

Hidden history: 60,000 Americans forcibly sterilized over 70 years

Yeah, sure the bad old days of gross racial discrimination in America are over... since 1979.

Seriously, this is ghastly and wrong and everybody should know about it. They certainly don't teach these facts in "liberal" U.S. history courses:

"Beginning with Indiana in 1907, 32 states eventually passed laws allowing authorities to order the sterilisation of people deemed unfit to breed. The last programme ended in 1979.

"The victims were criminals and juvenile delinquents, women deemed sexual deviants, homosexual men, poor people on welfare, people who were mentally ill or suffered from epilepsy. African Americans and Hispanic Americans were disproportionately targeted in some states."

In a 1927 decision, U.S. Supreme Court Justice Oliver Wendell Holmes wrote: "It is better for all the world if, instead of waiting to execute degenerate offspring for crime or to let them starve for their imbecility, society can prevent those who are manifestly unfit from continuing their kind."

"All told, scholars estimate more than 60,000 Americans were sterilised under eugenics laws in the 20th Century."


By Daniel Nasaw
June 14, 2011 | BBC News

Every type of libertarian explained

I'm not a big fan of political cartoons but this one very accurately, completely, and humorously dissects homo libertariunus.

My favorites are the "Denial-ican" and "The Island."


By Barry Deutsch
June 29, 2010 | Ampersand

Geezers to bequeath 3 million jobs; youngsters won't qualify

Said Anthony Carnevale, director of Georgetown University's Center on Education and the Workforce:

The industries [which need workers] that we're talking about are fairly broad-based, but the ones that are most striking are industries that have lots of what I would call 'orphan jobs.' Manufacturing, utilities, transportation, mining — a whole set of agricultural jobs.
All those industries, he said, 'are dying.' But because so many baby boomers will be retiring in the next decade, those industries will still produce 'huge numbers of job openings that we can't fill.'
In manufacturing alone, 'while the overall number of jobs will decline by a million jobs over the next decade, there will be 3 million job openings due to retirement.'
Lots of baby boomers retiring is not just bad news because they'll be milking Social Security and Medicare and bankrupting the federal treasury -- it's good news because they'll open up jobs for younger workers. But not enough younger workers are qualified. And this leads to another problem I've talked about for years: the lack of real, quality vocational training in the U.S.

Continued Carnevale [bold and italics mine]:
'If we decide that we're going to, especially in high school, begin to train people for vocations — especially vocations that ... don't require four year[s of] college — we'll quickly find that the kids who are available for that are black, Hispanic or low income. ... We'll end up 'tracking.' That makes it very difficult for political leadership and policy leadership to focus on this issue. It creates a moral dilemma where we can, if we want to, make people better off. But if we stick to the purity of our ideals, which is that everybody goes to college and gets a four-year degree, we're not going to be able to get there.'
Well, then our ideals are all screwed up! Only 51.5 percent of able-bodied black Americans is employed right now, the lowest number since 1984. And black unemployment (meaning those who are looking for work but can't find any) is about 16.1 percent, compared to 11.8 percent for Latinos and about 9 percent for whites. That's an economic depression for minorities, folks.

We've convinced ourselves that college is for everybody and it's not. Meanwhile, colleges are getting worse and worse, catering to the lowest common denominator, while raising everybody's tuition, making the whole higher ed. system a cynical, ineffective diploma factory.

So elementary and high schools, track away! Let vocational students earn decent middle-class manufacturing wages and then send their kids to college, if that's their ideal. After all, the American Dream is to better yourself and leave your kids better off than you by working hard and playing by the rules.


By Mark Memmott
June 15, 2011 | NPR

Any advert creates 'internal battle' in your brain

The "self-control region [of the brain] is in a tug of war with the parts of the brain affected by ads."

This info raises yet more doubts about just how free is humans' free will. Second, it makes me think of the $ hundreds of millions in political campaign spending every year, most of which goes towards TV commercials. Are we really making informed political choices, or just responding to non-conscious cues?

The good news is that every time you think critically about how ads work, you create new patterns in your brain that strengthen the self-control regions. Unfortunately, that's also why marketers spend $17 billion a year targeting ads at children, who have not yet developed the capacity and experience for critical thinking. Companies are hoping they can hard-wire those buying tastes and habits in children at a tender age so they'll continue on into adulthood.


By Maya Cueva
June 15, 2011 | All Things Considered on NPR

Thursday, June 16, 2011

Finally! Ohioans can take concealed guns into bars

This is an important piece of long overdue legislation. Thanks, Ohio GOP, for keeping your priorities straight, and not getting distracted by little things like the economy and unemployment.

Seriously though, haven't Ohio's legislators ever listened to Lynyrd Skynyrd's "Gimme Three Steps?" Guns, bars and babes are a lethal cocktail.



UPDATE (07.06.2011): There is at least one bar in Ohio where you still may not carry a weapon: the fancy new full-service bar in the the Ohio Statehouse.


By James B. Kelleher
June 15, 2011 | Reuters

MB360: Vanishing U.S. middle class; 'ownership society' is for richest 10%

This is a pretty shocking realization: "For those [Americans] with a sizeable portfolio you are in the upper-class simply by definition."



Posted by mybudget360
June 16, 2011

For over 30 years the debilitating shrinkage of the middle class has been papered over with access and use of debt. Debt in every form; mortgage debt, credit card debt, auto loans, and student loans. Yet debt is not wealth. Americans are facing a financially nightmare where 1 out of 3 has no savings. This should come as a little surprise since the per capita income in the country is $25,000. Many workers are simply getting enough out of their stagnant paychecks to pay the monthly bills. Of course much of the real wealth has been systematically looted through bailouts and crony capitalism. There was a time when the government and even Wall Street benefitted by a growing U.S. middle class. Now all you hear from banking executives is how much cheaper it is to outsource American jobs at the same time their pay keeps soaring. Why don't we outsource their job? The problem of course is a deep capture of our political system and a perfect fusing of Wall Street and the government. The middle class is slowly floating away as inflation created by the Fed bailouts of the too big to fail banks causes more and more financial pain.

The economy that debt built

I wanted to examine the growth of personal income in relation to household debt. If we setup a ratio between the two we see that from the 1950s to the early 1980s the ratio was rather stable. Even while debt went up, so did incomes at a relative level. This all changed in the early 1980s:

image.png

Just like a person can go out and buy a McMansion with a giant mortgage, lease a European luxury car, and go into $100,000 of student loan debt the good times are felt only shortly. The bill eventually does come and it is coming in full to the American public. Yet the middle class only expanded because of access to debt. So as this access is shunted the American middle class has now faced over a decade of lost returns in wages. No growth. The reason so many people are losing their homes is because they simply do not have the income to sustain their purchases of the years when debt was handed out like candy. The big banks still have access to this debt machine courtesy of the Federal Reserve. Yet the middle class is now being thrown to the wolves to support the too big to fail. Why doesn't the media after four years examine deeply what we have gotten for the trillions of dollars thrown at the banking sector?

Stock distributions

Stock wealth is a good indicator of wealth in a nation. Someone can own a nice home, a fancy car, and all the goodies in their home but have zero wealth and even a negative net worth. But with 1 out of 3 Americans with no savings and 50 percent of Americans unable to come up with $2,000 in the next 30 days, very few can be said to have wealth. At this point it is useful to examine who owns the stocks in America:

image.png

Source: Economic Policy Institute

The top 1 percent in our country control over 38 percent of all stock wealth. The top 10 percent control over 81 percent of all stock wealth. In the end, stocks are something the middle class by definition do not participate in with any significant vigor. For those with a sizeable portfolio you are in the upper-class simply by definition. At some point people have lost perspective. There was a study conducted recently that found for millionaires to feel wealthy they need $7.5 million. Have these people lost perspective that 45 million Americans are on food stamps? Or what about the 23 million underemployed in the country? Or the fact that half of the country couldn't come up with $2,000 in 30 days. This group has bought into the Wall Street propaganda machine of the poor financial CEO only making enough to fuel 20 yachts. So yes, the bailouts were justified in their mind.

The gap only grows

What made our country grow from the 1950s to 1960s in a healthy manner was a shared growth in real personal income without relying too heavily on debt. This was shared prosperity. Nothing like that has occurred over time. The data is what it is and the gap is obviously present unless you choose to ignore it:

image.png

Again you can go back to the 1980s to see the start in this income divergence. Since that time the bottom 80 percent has been sacrificed while the top 1 percent has seen accelerated growth of their wealth. Now what exactly happened over this time? First there was massive financial de-regulation. This allowed for the junk bonds of the 1980s, the S&L Crisis, the tech bubble, and finally our historic housing bubble. Yet while the middle class got taken for a ride after each bubble burst, the financial sector simply received a bailout each time. The returns from government bailouts are guaranteed so this is why Washington D.C. is filled with banking lobbyists. It is the best return you can get when you can steal the taxpayer blind.

The wealth inequality in our nation is a consequence of this de-regulated two-tier system of crony capitalism. As the middle class has seen their wealth and jobs being stripped from their overworked hands, the top 1 percent has enriched themselves with every subsequent bailout. As we all know through the parroted financial media, stocks over the long-run return 8 percent. Yet what if you have no savings as many Americans do? What about the fact that this does not factor in the reality of selection bias when all we see is companies that continue to survive (i.e., no failed companies in the S&P 500 right now). So you see what you want to see. And the most important key ingredient is government backed taxpayer bailouts for the ultra wealthy. They can't lose but the charts above show that this has come at the expense of the middle class. No one is begrudging say a Netflix that is providing an actual service and making fantastic sums of money. Good for them. But what we have is the financial sector simply looting the wealth of middle class Americans and providing no service other than stealing their money for bailouts. Then you have the too big to fail making billions on onerous fees like overdrafts which directly hurt the poor the most.

Americans that do have a tiny bit of wealth have it in their homes. Yet as we all know the housing market isn't exactly doing that well right now:

image.png


Didn't the bailouts have a premise of helping middle class homeowners? Of course not. The money has been diverted for banks to speculate in global stock markets while they completely ignored the housing market. The new world of crony capitalism, where the connected win even if they lose.

Reich: Analysis of economic crisis in 2:15

This is pretty darn good, and plenty short enough to watch during commercials on FOX or talk radio.


By Robert Reich, karinmoveon
June 13, 2011 | YouTube

Tuesday, June 14, 2011

Gulf 'dead zone' starts in your lawn

An old Midwestern plant breeder and farmer who is no tree hugger told me that the nitrogen fertilizers causing the dead zone in the Gulf of Mexico the size of Lake Erie are largely from Americans' lawns. People use too much fertilizer and cut their grass too often, so the nitrogen can't stay in the soil but gets washed away and eventually makes its way down the Mississipi and into the Gulf.

Just another example of how each of us adversely affects the environment. There's no arguing about it.


By Cain Burdeau
June 14, 2011 | Huffington Post

Saturday, June 11, 2011

Black: Ireland and Iceland were models to follow?

Black asks if anybody cares to remember how Ireland and Iceland were trotted out by EU and US neo-liberals as great successes to follow in their deregulation, privatization of public assets, and budget cuts, particularly to the social safety net.

And yet budget surpluses and supply-side growth didn't save Iceland or Ireland from the financial crisis.


ECB President Trichet Praised Ireland as the Model for the EU to Follow
By William K. Black
June 7, 2011 | New Economic Perspectives

Friday, June 10, 2011

SecDef Gates: NATO's future 'dim, if not dismal'

Gates's criticism are not untrue, but they are kind of beside the point, since nowadays NATO has 3 real reasons for being:

1) Not to assist the U.S. militarily, but to provide a fig leaf of international approval and support for U.S. military aims abroad;

2) To give Euro-pacifists with miniscule military budgets a seat at the big kids table, which is bought and paid for by the U.S.;

3) To provide a pretext -- in the name of alliance cooperation, or thwarting Iranian missiles -- for building up U.S. forces on Russia's western flank.

NATO is a once admirable institution which has outlived its usefulness; since the fall of the USSR it has failed to adapt and find a new mission. Time to dispense with it.


June 10, 2011 | Huffington Post

U.S. Colonel sickened by cheerleading Afghan campaign

Here's the e-mail from one U.S. Colonel to another, which was posted on TIME's site:


Email to Col XXX

The mendacity is getting so egregious that I am fast losing the ability to remain quiet; these yarns of "significant progress" are being covered up by the blood and limbs of hundreds - HUNDREDS - of American uniformed service members each and every month, and you know that the rest of this summer is going to see the peak of that bloodshed.

The article by Michael O'Hanlon last week (i.e. Success worth paying for in Afghanistan) and the one in today's WSJ by Kagan and Kagan (i.e., We Have the Momentum in Afghanistan) made me sick to my stomach - especially the latter. Have you seen it yet? It is the most breathless piece of yellow journalism I've seen in the entire OIF-OEF generation.

[The Kagans are well-known neocon cheerleaders of every military action the U.S. takes. -- J]

According to the Kagans, "If Mr. Obama announces the withdrawal of all surge forces from Afghanistan in 2012, the war will likely be lost. Al Qaeda, Lashkar-e-Taiba, and other global terrorist groups will almost certainly re-establish sanctuaries in Afghanistan. The Afghan state would likely collapse and the country would descend into ethnic civil war. The outcome of this withdrawal policy would be far worse than Nixon's decision to accept defeat in Vietnam, for it would directly increase the threat to the American homeland. Apparently they forgot, "there's a commie behind every bush," "the Russians are coming!" and "if Vietnam falls, all of Asia falls to the Communists!" That logic was absurd in the 1960/70s, and its even more laughable today - or it would be laughable if it didn't cost so damn many American lives to prop up the fantasy.

These people are actually arguing for increased involvement. In fact, they are saying that we should expect high casualties this summer (after which - without explanation - we'll have beaten the TB in the south), then we'll move the troops up to RC-East where there's still a lot of fighting - and as a result, we'll have another spike in the 'fighting season' of 2013, after which (according to the neat schedule the Kagans map out) we'll be ready to hand over control of the country to GoIRA and the ANSF on schedule in 2014.

It's sheer madness, and so far as I can tell, in the mainstream media and reputable publications, it is going almost entirely without challenge.

Colonel YYY


By Chuck Spinney
June 8, 2011 | Battleland blog - TIME.com

Thursday, June 9, 2011

Gallup poll: Egyptians don't want theocracy

Of course Egyptians don't want theocracy... they want socialism and Marxist communism! Glenn Beck and Rush Limbaugh already warned us!....


By Adelle M. Banks
June 8, 2011 | Religion News Service

[...]

About seven in 10 Egyptians said clerics should advise national leaders on legislation. In comparison, 14 percent said religious leaders should have full authority in creating laws and 9 percent said they should have no authority.

The findings, announced Tuesday (June 7), come from the United Arab Emirates-based Abu Dhabi Gallup Center, which monitors attitudes of Muslims worldwide.

Even as they seek a limited advisory role for clergy, most Egyptians (67 percent) want religious freedom as a provision in a new constitution. A much higher percentage (92 percent) say freedom of speech should be included, and slightly more than half want a new constitution to include freedom of assembly.

Food is not a commodity

Sure, some food is traded as a commodity, but the food we eat is not a commodity. We don't go to the supermarket to buy big boxes labelled "FOOD" for the cheapest price we can possibly find. But when it comes to school lunches, we're not far from it.

The food we put in children's bodies is not a commodity.

Just like Jesus threw the money changers out of the temple, the government needs to throw these junk food marketers out of our schools.


By Peter Overby
June 8, 2011 | NPR


Senate: Little to show for $19 billion in Afghan aid

It's extremely hard and expensive to get out and do development work in an active conflict zone, much less ensure proper oversight to prevent waste, fraud, and abuse by grantees, contractors and recipients. The State Dept. and USAID certainly have their work cut out for them there.

USAID has already issued two replies to this critical Senate report. USAID Administrator Rajiv Shah noted that in the past 18 months USAID has tripled its staff on the ground to manage assistance. And as an example of USAID's new focus on contract oversight and compliance, Shah mentioned AED, a 50-year-old NGO that is now laying dead and on the auction block after USAID smacked it down for corruption in Pakistan, (RIP).

UPDATE: "Sold! To the gentlemen from North Carolina!" I missed the announcement June 8 that FHI bought AED.


By Donna Cassata
June 7, 2011 | AP

Afghanistan is at risk of a deep financial crisis when foreign troops leave in 2014 if the United States is unable to overhaul its multibillion-dollar package of nation-building assistance, according to a congressional report that comes as President Barack Obama weighs the size and scope of the initial phase of a U.S. troop drawdown.

The report, completed over two years by Democrats on the Senate Foreign Relations Committee, said the U.S. stabilization programs in Afghanistan have had limited success despite about $18.8 billion in U.S. foreign aid over 10 years – more than any other country, including Iraq.

Misspent foreign aid can result in corruption, alter markets and undercut the ability of the Kabul government to control its resources, said the report, which was posted Tuesday night on the Senate committee's website. The World Bank found that a whopping 97 percent of the gross domestic product in Afghanistan is linked to spending by the international military and donor community.

"Afghanistan could suffer a severe economic depression when foreign troops leave in 2014 unless the proper planning begins now," the report said.

The State Department and the U.S. Agency for International Development are spending about $320 million a month on foreign aid there, relying on the money to "win hearts and minds." Among the successes has been a sevenfold increase in the number of children attending school and gains in health care.

But the report said the United States must take a closer look at how it spends the money, relying heavily on contractors. The U.S. must do a better job of oversight, especially as it funds more aid through the Afghan government. One recommendation was to standardize Afghan salaries and work with the government on staff limitations.

[Translation: Find another employer for Afghans besides the U.S.-funded Afghan government.]

The panel's Democrats also suggested that Congress implement multiyear aid programs and closer scrutiny of stabilization programs

"Transition planning should find the right balance between avoiding a sudden drop-off in aid, which could trigger a major economic recession, and a long-term phase-out from current levels of donor spending," the report said.

The report came a day before the Foreign Relations Committee's confirmation hearing for Ryan Crocker, Obama's choice to serve as U.S. ambassador to Afghanistan. Crocker is certain to face several skeptical and war-weary lawmakers wondering about the U.S. investment in Afghanistan in the 10th year of the war and after the killing of al-Qaida leader Osama bin Laden.

Republicans and Democrats are pressing for a robust drawdown of the 100,000 U.S. forces from Afghanistan, expected to begin in July, especially in a time of serious U.S. financial woes. The administration is seeking about $3.2 billion in foreign aid for Afghanistan in next year's budget, an amount likely to be closely reviewed.

Double dip means time to buy?

The "double dip" in housing is now official. And the premier housing economist Mark Zandi of Moody's Analytics says it's a good time to buy, if you can afford it. Going back to 1986, the buy vs. rent ratio has never been so low.

"I think the arithmetic is such that if you plan to live in your home five or more years, then you should really consider buying a single-family home in most parts of the country at this point in time," Zandi said. "Prices have fallen so far, that single-family housing now is very, very attractive; very affordable [...] and it's now even attractive relative to renting."

"[H]omeownership has been such an important part of the American Dream, because people have used it as a way to save. And it's been a relatively safe way to save. Now of course, as we know as we have seen, there are ups and downs. But in general it's been a pretty good investment."

Just don't try to time the market; base your buying decision on your personal needs and financial wherewithal.


By Chris Arnold
June 8, 2011 | NPR

Wednesday, June 8, 2011

'Patriotic Millionaires' want gov't to raise their taxes

"Well, if they want to pay more tax then they should write a check to the IRS, ha-ha-ha!"

That's how many anti-tax conservatives, including Sen. Orrin Hatch, respond to millionaires like Warren Buffet and Bill Gates who say their income tax is too low.

The organization Patriotic Millionaires has a comeback to that snarky reply: "[W]e are a few dozen people in a nation of over 300 million facing a debt measured in the tens of trillions. To suggest that we try to tackle this problem by making individual contributions is, frankly, insulting. It is like suggesting to someone expressing a desire to serve their country by bearing arms that they buy a rifle and a plane ticket to Afghanistan. Some problems are too big to be solved except through collective effort and shared sacrifice, and this is one of them."

Moreover, PM notes that individual citizens don't get to pick & choose how Congress tax & spends; therefore, Congress should not pass off its duty to be fiscally responsible to individual citizens.

They even had the gall to note that "the Constitution of the United States of America was established for the express purpose of 'promot[ing] the general welfare' and not just the welfare of the rich and powerful"! (Hey, no fair turning the Constitution against tax haters, it belongs to them!)

But people, realistically, writing reasoned letters to Sen. Orrin Hatch isn't going to change things. Here's the real answer: the Patriotic Millionaires must donate millions of dollars to Congressional candidates who promise to raise their taxes. Convincing Congress to raise their taxes is gonna cost them, there's no getting around it. That's just the way it is in our bought-and-paid-for democracy!


By Arthur Delaney
June 6, 2011 | Huffington Post

Paul Egerman isn't certain how many millions he's saved from the tax cuts enacted during the George W. Bush administration in the early 2000s and extended by President Barack Obama in December of last year.

"I do not know how much I've saved over 10 years but I'm sure it is several million dollars -- probably in excess of $10 million," said Egerman, founder of a medical transcription company called eScription.

And what, HuffPost asked, have you done with all that cash?

"I've kept it," he said. "I have not done anything with that money."

Egerman is part of a gang of self-described Patriotic Millionaires who wish the federal government would help itself to more of their money to address its big budget deficits. Nearly 200 millionaires have signed a letter asking congressional Republicans to consider healing budget gaps with increased revenue -- in particular, higher taxes on millionaires -- instead of just reduced spending.

The group is coordinated by the Agenda Project, a New York think tank, and Wealth for the Common Good, a network of business leaders and wealthy people that promotes "fair and adequate taxation" to support the economy.

Other millionaires on a conference call Monday morning said they had more fun with their extra money than Egerman did.

"I probably traveled a little bit more than I otherwise would have," said Frank Patitucci, CEO of NuCompass Mobility Services, a company that offers relocation management services.

"I got a bigger boat than I used to have," said Dennis Mehiel, the founder and chairman of cardboard box manufacturer U.S. Corrugated, Inc. He lamented that the construction of his 150-foot sloop didn't create any jobs for American workers. "The problem is, it was built in Italy."

Dal LaMagna, founder of Tweezerman, said he used his extra money to help the local economy in by adding stuff to his house in the Pacific Northwest.

"I just started creating jobs myself. I built a dance floor in my house -- which I really didn't need," LaMagna said, adding that he also put in a parking lot. "I just became a Dal LaMagna economic stimulus package in Poulsbo, Washington."

The tax cuts enacted in 2001 and 2003 overwhelmingly benefited the richest 1 percent of taxpayers, according to the nonpartisan Tax Policy Center, a joint project of the Brookings Institution and the Urban Institute. The progressive Center on Budget and Policy Priorities estimated in 2009 that the tax cuts "added about $1.7 trillion to deficits between 2001 and 2008."

The tax cuts would have expired in January, but President Obama broke a campaign promise and struck a deal with congressional Republicans that reauthorized the cuts for two more years in exchange for one year of extended unemployment benefits, among other things. Tuesday, June 7, is the 10th anniversary of the tax cuts.

Extending them further would result in an extra $68,079 for the average member of the richest one percent of taxpayers in 2013, according to estimates by progressive advocacy group Citizens for Tax Justice.

"If they are fully extended, they will cost five-and-a-half trillion dollars over the coming decade," said CTJ President Bob McIntyre on the conference call.


MORE:

Tuesday, June 7, 2011

Guaranteed health care will unlock entrepreneurship

Conservatives often warn that Obamacare will hurt small business. But they forget that the small-business owner needs healthcare, too!

Before Obamacare and its tax credits for small business, many small businesses with only a few employees could not afford to buy health insurance.

But what about businesses still in the go/no-go stage? Indeed, the prospect of losing one's health insurance keeps would-be entrepreneurs -- especially those with families, or who would like to have children -- locked into corporate jobs instead of taking the risk to start up a new business.

(Meanwhile, FOX Business's answer to health costs is barter.)

As I've noted before, guaranteed, affordable health coverage for every American will take some of the personal fear and financial risk out of starting up a new business venture.


By John Arensmeyer, Founder and CEO, Small Business Majority
June 2, 2011 | Huffington Post

Farmers: E-Verify will destroy farm labor supply

Get ready for $5 heads of lettuce, America!


By Alicia A. Caldwell
June 6, 2011 | Huffington Post

The agriculture industry fears a disaster is on the horizon if the one bit of new immigration policy that Congress seems to agree on becomes law.

A plan to require all American businesses to run their employees through E-Verify, a program that confirms each is legally entitled to work in the U.S., could wreak havoc on an industry where 80 percent of the field workers are illegal immigrants. So could the increased paperwork audits already under way by the Obama administration.

"We are headed toward a train wreck," said Rep. Zoe Lofgren, a California Democrat whose district includes agriculture-rich areas. "The stepped up (workplace) enforcement has brought this to a head."

Lofgren said farmers are worried that their work force is about to disappear. They say they want to hire legal workers and U.S. citizens, but that it's nearly impossible, given the relatively low wages and back-breaking work.

Wages can range from minimum wage to more than $20 an hour. But workers often are paid by the piece; the faster they work, they more they make. A steady income lasts only as long as the planting and harvesting seasons, which can be measured in weeks.

"Few citizens express interest, in large part because this is hard, tough work," Agriculture Secretary Tom Vilsak said this past week. "Our broken immigration system offers little hope for producers to do the right thing."

Arturo S. Rodriguez, president of United Farm Workers, said migrant farm workers are exposed to blistering heat with little or no shade and few water breaks. It's skilled work, he said, requiring produce pickers to be exact and quick. While the best mushroom pickers can earn about $35,000 to $40,000 a year for piece work, there's little chance for a good living and American workers don't seem interested in farm jobs.

"It is extremely difficult, hard, dangerous work," Rodriguez said.

Last year Rodriguez's group started the "Take Our Jobs" campaign to entice American workers to take the fields. He said of about 86,000 inquiries the group got about the offer, only 11 workers took jobs.

"That really was thought up by farm workers trying to figure out what is it we needed to do to show that we are not trying to take away anyone's job," Rodriguez said.

Vilsak and the American Farm Bureau Federation president, Bob Stallman, said in a recent conference call with reporters that the best and likely only hope to stave off an economic catastrophe for American farmers and consumers is comprehensive overhaul of immigration policy. Vilsak said the industry is worth about $5 billion to $9 billion a year.

"We need to address the agriculture labor supply," Stallman said. "This situation will affect the future of America's farmers and ranchers."

Manuel Cunha, president of Nisei Farmers League, a group representing growers in central California, said farmers don't have the wherewithal to verify a worker's status when their labor force is often hired on the spot and in a hurry to pick ripe crops. Forcing them to verify a worker's legal status, he said, would prove disastrous.

"If we were to use E-Verify now, we'd shut down, either that or farmers would go to prison," said Cunha, a Fresno-based citrus farmer. "We've admitted many workers are not legal and if you have to get rid of everybody, where do I go to get my labor? Nowhere. We have to have a work force that we can put in the system."

Shawn Coburn, a politically active farmer who grows thousands of acres of almonds on the west side Fresno County, said he favors tighter borders, a guest worker program and a path to citizenship for those already in the U.S., or at the very least their children. But, like Cunha, he believes a mandatory E-Verify plan would be nothing but trouble for the industry.

"I don't think it's going to happen, but if it does it would throw the California economy for a loop," Coburn said.

Without a broad overhaul in the works, industry officials have focused on improving the H-2A temporary agricultural workers visa program that's aimed at allowing season workers to come and work on U.S. farms.

The program, however, is costly, time consuming and inefficient, according to Cathleen Enright, vice president of federal government affairs for the Western Growers Association.

"It has never been a great program or easy to work with," Enright said. "It's an unbelievably crushing program."

There isn't enough capacity in the system to process, interview and approve visa applications for the nearly 1 million seasonal workers who take to the fields every season. Farmers are required to pay for a worker's transportation from their home country to the fields, provide housing and other benefits.

Even minor violations of the numerous rules and regulations that govern the H-2A program can lead to hefty fines, Enright said.

"It's too expensive, it's too litigious, it's too bureaucratic," said Lee Wicker, deputy director of the North Carolina Growers Association. "We need a program that farmers can use and have confidence in."

Rep. Trey Gowdy, R-S.C., said farmers in his area want to do the right thing and hire legal workers but they are frustrated with the stifling bureaucracy that comes with the visa program.

"It's a labyrinthine visa process, with the slow walking of applications," Gowdy said. "You could not by accident come up with a better plan to ruin the small family farm."

Farmers, he said, "are just at their wits' end."

Using the program to get workers can put farmers at a disadvantage if their competitors decide to take their chances and hire illegal workers, Wicker said.

Lawmakers agree the visa program is problematic, but there's a wide divide on how to make it workable.

In 2009, Rep. Howard Berman, D-Calif., and Sen. Dianne Feinstein, D-Calif., introduced legislation that would have given temporary resident status to immigrant farm workers and have created a path to legal residency for those workers after five years.

Neither bill, known as the AgJOBS Act, made it out committee. The idea is part of the discussion involving changes to the seasonal workers visa program, but Republicans have pledged to block it because it includes a path to legal status for immigrant workers.

Rep. Dan Lungren, a California Republican from an agriculture industry-heavy district near Sacramento, has said he sees that same "train wreck" Lofgren described, but that the AgJOBS bill isn't the answer.

"We're going to have a crisis in agriculture," Lungren said during a hearing this year on the visa program by the House Judiciary subcommittee on immigration policy and enforcement. "And while it sounds great to say an agreement (on AgJOBS) is going to take care of it, it's not going to pass."

About the only hope for success for any immigration-related legislation, Lungren and others say, is a bill that would make it mandatory for American employers to use the government's E-Verify program to ensure their workers are legal.

GOP Rep. Lamar Smith of Texas, chairman of the House Judiciary Committee, has pledged to introduce such legislation. Such a proposal appeared to get a push this past week when the Supreme Court ruled 5-3 in favor of an Arizona law that allows the state to penalize businesses for hiring illegal immigrant workers.

Agriculture officials say there needs to be some exception for farm workers.

"It needs to take into account the unique aspects of agriculture," Vilsak said.

MB360: Student loans the next big bubble

U.S. student loan debt has increased from about $200 billion in 2000 to nearly $1 trillion in 2011. It is the next big bubble, sold cynically by Wall Street and guaranteed by the U.S. Government -- the same corporate socialism in the name of "helping" consumers that blew up the housing bubble.

MB360 believes student debt has all the ingredients of the next economic bubble:

"The cost of going to college has outpaced every category of living by a very wide margin. It is hard to believe but the cost of college has even surpassed the now historic housing bubble. How can this be? You have a perfect combination of:

- Un-regulated casino like financial sector
- Government bought out by financial sector and used as a dumping ground
- A myth that any college is a good college
- A marketing and propaganda machine that is actively destroying the middle class"

As MB360 notes, "We are seeing now an army of unemployed college graduates" who are laden with an "albatross" of onerous student loans. Indeed, since the 2008 recession, "every other item of consumer debt has contracted strongly except that of student loans." Partly this is because you can't write off student loans when declaring personal bankruptcy, unlike with mortgage or credit card debts; and the late-payment fees just keep piling up.

For-profit colleges are diploma factories substituting credentials for real knowledge, but employers aren't fooled. They aren't hiring. It's a shame that so many enrollees in these colleges are from our Armed Services, and financed by the US Government! Obama is trying to regulate for-profit colleges but not aggressively enough.


Posted by mybudget360
June 6, 2011


Monday, June 6, 2011

More proof Facebook is a simulacrum


Our hard-wired genetic limitation on meaningful association with others may disappoint you, but there is still room for optimism.

First, your world is more intimate than you think it is, no matter how big you want to make it, or how big you feel under pressure to make it in today's global world. So concentrate on cultivating your personal "village" of 150 or fewer people: it's yours and nobody else can do it for you.

Second, you are one of only 150 (or fewer) of the most important people of every friend or close associate you have, i.e. you are automatically a member of their village, too. You may be more special to others than you think!

Third, the purpose of networking isn't to endlessly collect business cards and get acquainted with more and more people, it's to cultivate meaningful relationships in your village of 150 (or fewer) friends and associates, and from it receive real recommendations and reliable info, thereby extending your circle of trust beyond 150 still in a meaningful and personal way, unlike feckless friending on Facebook or connection collection on LinkedIn.

UPDATE: I added like 15 contacts on LinkedIn over the past few days. Guilty!


June 4, 2011 | All Things Considered on NPR

Saturday, June 4, 2011

Banks, real estate agents, & consumer advocates are all wrong

For the record, I'm in favor of preferred mortgage rates for those who pay 20 percent down on a house. [UPDATE: You can hardly qualify for a loan at any rate nowadays without 20 percent down.] It might sound illiberal of me, but during the Bush years too many darn people bought houses they couldn't afford, or speculated in housing as a leveraged investment, and that's partly why we're in this mess now.

And I'm in favor of proposed regulations that would require banks to hold on to 5 percent of the risk associated with bundled mortgagees, or mortgage-backed securities. Banks have to keep some skin in the game.

If buyers can't put down 20 percent, or their monthly mortgage payment is more than 1/3 their net monthly income, then they should buy a cheaper house, or rent. That is the old rule of thumb that was thrown out the window, to our detriment.

Politicians should not save the banks and bondholders (again) by propping up the housing market (again); we need time to let existing houses go down in price and clear the market. 13 percent of U.S. housing stock is currently sitting vacant. We need those thousands of McMansions to be sold at McDonald's prices!


By Janell Ross
June 2, 2011 | Huffington Post