bailout

“As for the rest of America, good luck”

Still processing Andrew Huszar’s remarkable Confessions of a Quantitative Easer, which appeared on the Wall Street Journal’s op-ed page on Monday.

A former Morgan Stanley managing director,  Huszar managed the Federal Reserve’s $1.25 trillion agency mortgage-backed security purchase program from 2009 to  2010. Since the crash of 2008, he writes,  the Fed has, by one estimate, spent over $4 trillion for a total return of as little as a $40 billion bump in output, which is minuscule (it’s sometimes tough to visualize a trillion dollars. Here is a handy reference.)

This, while BOTH parties insist “we’re broke” (Obama’s very words).

We’re broke, but the Fed can create $4 trillion to loan to the banks. Oh, I see. In return the nation got very little, but for the banks it was a  windfall.

 Despite the Fed’s rhetoric, my program wasn’t helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn’t getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.

Here is a naive question: If the government can print $4 trillion to give to banks, to very little positive effect for the  country, why can’t it print even a fraction of that amount to finance massive public works to make need infrastructure repairs, make education more affordable (or better yet, free), and convert our energy economy to one that is sustainable?

Hell,giving every American a few thousand bucks would be a much more effective stimulus than what the Fed has done.

And don’t forget that the QE program rewards the very entities that created the crisis.

Having racked up hundreds of billions of dollars in opaque Fed subsidies, U.S. banks have seen their collective stock price triple since March 2009. The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.

As for the rest of America, good luck. Because QE was relentlessly pumping money into the financial markets during the past five years, it killed the urgency for Washington to confront a real crisis: that of a structurally unsound U.S. economy. Yes, those financial markets have rallied spectacularly, breathing much-needed life back into 401(k)s, but for how long? Experts like Larry Fink at the BlackRock investment firm are suggesting that conditions are again “bubble-like.” Meanwhile, the country remains overly dependent on Wall Street to drive economic growth.

Even when acknowledging QE’s shortcomings, Chairman Bernanke argues that some action by the Fed is better than none (a position that his likely successor, Fed Vice Chairwoman Janet Yellen, also embraces). The implication is that the Fed is dutifully compensating for the rest of Washington’s dysfunction. But the Fed is at the center of that dysfunction. Case in point: It has allowed QE to become Wall Street’s new “too big to fail” policy.

“squabbles around the edges about who’d get elected, but wide agreement on the rules of the game”

Bruce Dixon’s Closer Than You Think: Top 15 Things Romney and Obama Agree On improves and expands upon the point I was trying to make in my WASSUP post a while back.

Basically, I said what is Off the Table is far more important, and more dangerous, than what the parties are arguing about.

Dixon looks back to the post-Civil War era as a comparable era of malign consensus:

Too much agreement between Republicans and Democrats has always been bad news for those at the bottom of America’s class and racial totem poles.

Back in 1875, Frederick Douglass observed that it took a war among the whites to free his people from slavery. What then, he wondered, would an era of peace among the whites bring us? He already knew the answer. Louisiana had its Colfax Massacre two years earlier. A wave of thousands upon thousands of terroristic bombings, shootings, mutilations, murders and threats had driven African Americans from courthouses, city halls, legislatures, from their own farms, businesses and private properties and from the voting rolls across the South. They didn’t get the vote back for 80 years, and they never did get the land back. But none of that mattered because on the broad and important questions of those days there was at last peace between white Republicans and white Democrats — squabbles around the edges about who’d get elected, but wide agreement on the rules of the game.

Like Douglass, the shallow talking heads who cover the 2012 presidential campaign on corporate media have noticed out loud the remarkable absence of disagreement between Republican and Democratic candidates on many matters. They usually mention what the establishment likes to call “foreign policy.” But the list of things Republicans and Democrat presidential candidates agree on, from coddling Wall Street speculators, protecting mortgage fraudsters and corporate wrongdoers to preventing Medicare For All to so-called “foreign policy,” “free trade,” “the deficit” “clean coal and safe nuclear power” and “entitlement reform,” is clearly longer and more important than the few points of mostly race and style, upon which they disagree.

Read the whole thing….

I’m going to get straight to work hammering out a clever little acronym that contains all fifteen of Dixon’s points. It might take me a while.

“The horribly anti-democratic nature of all this”

I really liked Ian Welsh’s “What passes for smart on the Greek Debt Crisis,” a response to a Kevin Drum piece, in which Welsh makes a convincing case that Drum kind of didn’t really know what he was talking about.

Basically, Welsh says, Drum and other leading liberal bloggers accept without skepticism a number of conventional (and wrong) assumptions about the catastrophic things that will happen in the event of a country not doing what it’s told to do by the world’s banking establishment. Welsh points to the less-than-cataclysmic consequences of Argentina’s and Iceland’s default. And a commenter brings up another alternative to Playing the Game According to the Rules–Malaysia, which in the 90s, instituted currency controls as opposed to doing to IMF’s bidding.

Anyway, I’ll be honest: a detailed discussion of the economics is a little beyond me (and, as per Welsh, beyond Drum and Digby, among others), but the insightful part of the Welsh piece, and the chunk I’d like to share, is in his summation of “the horribly anti-democratic nature of all this.” I’ve highlighted the best, most quotable, bits…..

There is no actual democracy in any part of the world which is attached to the Wall Street centered financial system. Calls can run up to 1000:1 against TARP and it will pass. Strong majorities can be for or against particular policies and if the elite disagrees, that’s all that matters. There are no parties to vote for if you are against the current system.

In a sense, this is fair. Westerners thought that they could have consumer democracy: they didn’t have to participate in it except at election time, when they would vote for parties and platforms paid for and produced by someone other than them. Coke(tm)/Pepsi(tm) politics – you have a choice, you can choose either Coke or Pepsi! Politicians aren’t paid by you (their salaries are the least part of their real income) why would you think they care about your concerns?

You don’t pay for politicians or politics. This is the Facebook rule: if you don’t pay the freight, you aren’t the customer, you are the product. Politicians compete for the money and favors of the rich, and what they sell is the ability to wrangle you: to pass the austerity bills, to cut the benefits, to privatize the jewels of the public system, to force through the multi-trillion dollar bailouts. They control government for the benefit of the rich.

And the rich pay all the way down the line. They control the media, right down to the bottom, to make sure that what is discusses is what they want discussed, in the terms they want it discussed. That default isn’t that bad: forbidden. That currency controls mitigate damage in these circumstances: forbidden. That lenders will lend to defaulting countries almost immediately: forbidden.

That the mere mention of a directly democratic approach to Greece’s debt woes led to widespread panic in global markets tells you all you need to know about how robust, and how undemocratic (that word again), the system is.

Papandreou has recanted, sort of, and the Greek referendum is off the table. Temporarily, I think. Whatever his motivation, the Greek PM (or former Greek PM, depending on when you read this), has let the democracy Genie out of the bottle. I don’t think it will be easy for whoever takes over to refuse a referendum in Greece. And perhaps, perhaps, this is a precedent.

Hedges: America more or less screwed, thanks to the liberal class. Have a nice day!

UPDATE BELOW: A defense of liberals!

Chris Hedges continues to hammer on the failure of the liberal class. And I can’t say I find much with which to disagree—either in the video above or his recent piece “The World Liberal Opportunists Made.”

I get so tired of the fearmongering about the threat to Democracy posed by Rush, Beck, Christine O’Donnell and Palin. It is absolutely true that they are are clowns, dangerous clowns. But at the moment they hold zero real political power. One wishes the Democrats would stop talking about how awful their opponents are, and just run things, as they were elected to do. But that is the only weapon left in their arsenal. Unwilling to actually enact changes that live up to their purported ideals, all they can do is say, “Look over there. What if those bad people actually took power!?”

Not that there’s any chance of the Dems finding their spine at this point, but even if they did, Hedges says it’s already gone too far.

An ineffectual liberal class, in short, means there is no hope, however remote, of a correction or a reversal through the political system and electoral politics. The liberals’ disintegration ensures that the frustration and anger among the working and the middle class will find expression in a rejection of traditional liberal institutions and the civilities of a liberal democracy. The very forces that co-opted the liberal class and are responsible for the impoverishment of the state will, ironically, reap benefits from the collapse. These corporate manipulators are busy channeling rage away from the corporate and military forces hollowing out the nation from the inside and are turning that anger toward the weak remnants of liberalism. It does not help our cause that liberals indeed turned their backs on the working and middle class.

 

UPDATED: “In defense of liberals, though, we…uh. Yeah, I got nothing.”

Are the Dems stupid? Or not?

rahm
"Either way, I win." REUTERS/Jim Young

Money makes the Democrats stupid is a pretty decent rant by Eli at Firedoglake.

The Republicans, he observes, have a big advantage in terms of money because the ideology of conservatism lines up perfectly with giving rich people and corporations more money and power.

Not because they have more [money], although they usually do.  No, it’s because their base is almost completely aligned with their corporate and wealthy big-money donors, while the Democratic base is the complete opposite.

Republicans can deliver their megadonors tax cuts, deregulation, corporate welfare, and protection from prosecution, all cocooned in a conservative narrative of supply-side economics, free enterprise, and independent frontier can-do spirit that their base just loves.

Contrast this with the Dems, who, with a few exceptions, are pretty much on the same level in terms of greed and lack of scruples. But they have this nagging problem with their party’s (purported) ideology, which isn’t a good fit. They have to be sneaky because “there’s simply no way to spin pro-corporate, pro-wealth policies as congruent with progressive values.”

The best they can manage is to play the DLC/Third Way game of pretending that capitulation is really some kind of principled pragmatic centrism which is the only way to win elections or get anything done against the all-powerful GOP and its 55 49 40 41 Senate seats.

Some of the base reluctantly goes along with this because half a loaf is better than the enemy of the good or whatever, but none of us are particularly happy about always settling for a compromise of a compromise of a compromise. Think how much leverage Obama and the Democrats had after two huge electoral landslides, a huge Republican-branded financial crisis, and a huge congressional majority… and how little they did with it. They didn’t deliver on progressive priorities because that wasn’t what their big campaign donors wanted.

And now they’ve failed so miserably, sold out so blatantly, demoralized their base so completely, and ceded the populist ground so thoroughly to the Tea Party, that they’re on the brink of losing the House and maybe even the Senate. All of the Democrats’ kabuki to protect their corporate friends so they could rake in campaign cash and get re-elected will end up costing them their seats instead. Because it is possible to fuck up so badly and so obviously that all the money in the world can’t save you. Just ask the Republicans.

I like this, and I’m down with Eli’s disgust, but wonder if he might be missing something, like maybe the fact that it’s on purpose?

Not sure about this, but I’ll throw it out there and wonder aloud if perhaps we are in for a few decades where control of Congress (and maybe the Presidency) will swing from party to party with every election.

The Party Out of Power promises Change, gets in power, doesn’t change anything, and is sent packing. Or it promises to reverse the Mooslem Socialist Mismanagement of this Once-Great Nation. Until the voters realize they get screwed there too. Rinse and repeat.

Either way the party pros win. If in power, hey, you’re In Power. Out of Power you can make massive amounts of money in the private sector. (Think of Rahm’s waltz with hedge fund Magnetar Capital. Think Tom Daschle. Bob Dole.) Leverage your public service. G’head. You earned it. Take a position with one of the corporations you’ll be in charge of “regulating” when you get back into power. Money’s much better, and you will probably get to spend a little more time with the family.

And don’t worry. You’ll be back in D.C. before you know it. Count on the Other Party not satisfying those pesky voters either. Because there’s no way the non-rich 95 percent can be satisfied–unless legislation happens that actually reverses the flow of wealth.  And both parties have shown how firmly they are allied on the issue of wealth distribution.

At the moment, polls indicate voters will throw the current regime out, WITH AUTHORITY as Marv Albert used to say…. To replace it with a regime that makes no bones about its intention to give an ever bigger piece of the pie to the wealthy and powerful.

Does that makes sense? Not so much. Will it work for a few more election cycles? I wouldn’t bet against it.

From Iceland with love


Iceland’s president has recently given the middle finger to the “international financial system” (or more likely the two-fingered fingered flip favored in the UK) by blocking a $5 billion (US) debt repayment deal, pending a referendum on the matter. The Icelandic taxpayers are rightly questioning why every family in the country should give 40,000 pounds to England and the Netherlands to make amends for the failings of their genius MBA banking class.

President Olafur Grimsson’s role is largely ceremonial, or it was, until he took the bold step of nixing the deal, after he received a petition signed by 20 percent of Iceland’s population. Polls have about 70 percent of the voters saying they’ll vote against the repayment package as it stands. Bad things are being threatened.

“The Icelandic people … would effectively be saying that Iceland does not want to be part of the international financial system,” Britain’s Financial Services Minister Paul Myners said.

How do you say “What are the benefits, exactly?” in Icelandic.

OK. I may well be oversimplifying things. But I like the sound of this. A president who steps beyond his designated role to respond to the popular will, in the process stepping hard on the bunions of the very moneyed interests who put him into office. I guess it could happen. But could it happen here?

Oh, yes, the video. Emiliana Torrini, Icelanic/Italian singer. Lovely woman, lovely song, lovely  video.

Rahm sez: “NAFTA = Good Times!”

Easy credit ripoffs. Good times!

White House Chief of Staff Rahm Emanuel has been telling Democrats a win on the health issue will reverse the slide in public opinion, just as passage of another controversial proposal, the North American Free Trade Agreement, lifted President Bill Clinton in the polls.

Wall Street Journal, “Democrats pin 2010 hopes on bill”

In an only slightly different context a wise person said, “It’s scary to think that people this obscenely stupid are running the country.”

More on Jane, Grover and Rahm

All I know is the Hamsher/Norquist joint venture caused many Obama loyalists to pee their pants, and got a lot of positive comments on Jane’s own site. Not exactly surprising.

Someone asked about it on the President’s plane and was met with a predictably smug reply, that the Chief of Staff’s job was “very safe”.

And also: over the Christmas weekend the White House announced that the caps on Fannie Mae and Freedie Mac losses would be lifted. There was talk that they would be raised from $400 billion to $800 billion, but no. They have been raised, to, uh, infinity.

Did Jane Hamsher really whack Rahm Emanuel upside the head, as Cenk Uygur claims? If so, was it with a Nerf bat, or a 2 by 4 with a nail sticking out of it? Is he PISSED? Just mildly annoyed? More important, Will this be enough to shame the White House into taking any real judicial/investigative action with regard to Freddie Mac, like letting Inspector General Ed Kelley get back on the job? You know, 6 trillion dollars is a lot of money.

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