Buck Naked Politics

Small Banks Failing at High Rate, Economy Still Not so Good

 by Deb Cupples | When then-President Bush and then-Treasury Secretary Henry Paulson were bullying Congress and us taxpayers into freeing up hundreds of billions to bail out huge banks and investment firms -- while ignoring smaller banks and ordinary folks with adjustable rate mortgages -- we knew that something was amiss.

In short, we knew that (once again), that the agenda of certain corporate-friendly politicians and bureaucrats was not to truly bolster our nation's economy but to funnel cash to the same big-time execs who had run our nation's financial institutions (and economy) into the ground.

And we continue to see evidence that helping the big fish while ignoring the little fish does not create long-term economic health.  The New York Times tells us:

Colbert Hails the Triumphant Return to Wall Street of the Credit Default Swap; Takes On Capitalism's Enemy, Michael Moore

by Damozel | Wall Street traffics once more credit default swaps, which is why Colbert loves capitalism more than people.  Colbert loves capitalism because capitalism loves him back!

"You can't regulate evil, but I think I've found a way to chop it up, bundle it, and sell it to Goldman-Sachs." 

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Capitalism's Enemy - Michael Moore
www.colbertnation.com
Colbert Report Full Episodes Political Humor Health Care Protests

You Really CAN Fool Some of the People All of the Time: Limbaugh on Leno

by bartleby the scrivener | From HuffPost:

""Everybody agrees with me that listens to me," [Limbaugh] said. "I'm not controversial at all ... Obama is polarizing ... Look at how divided this country is right now."

"Asked by Leno if there was any way for Americans to bridge that divide, Limbaugh responded,"You give up what you believe in, agree with me, we'll get along."... (HuffPost)

I am so sure.  Limbaugh also defended the Wall Street greedheads who made a fortune out of wrecking the economy. 

"Leno also tried to get Limbaugh to agree that Wall Street CEOs should not be making billions of dollars off schemes that hurt investors. Limbaugh strongly disagreed. "The market will fix itself," he said. "It's none of my business what they make, Jay, it's certainly none of yours, and it's certainly not Barack Obama's what anybody makes ... If you believe in the capitalist system, you have to erase from your whole worldview what somebody needs."" (HuffPost)

Videos after the jump!

Crucial Viewing for Left AND Right; Michael Moore Discusses How Corporatism Is Undermining Old-Fashioned Democratic Values

by bartleby the scrivener | Arianna Huffington, author of Pigs at the Trough, discusses here why Moore's film is so crucial for both left and right.  She writes:

"In capitalism as envisioned by its leading lights, including Adam Smith and Alfred Marshall, you need a moral foundation in order for free markets to work. And when a company fails, it fails. It doesn't get bailed out using trillions of dollars of taxpayer money. What we have right now is Corporatism. It's welfare for the rich. It's the government picking winners and losers. It's Wall Street having their taxpayer-funded cake and eating it too. It's socialized losses and privatized gains.

"Which is why -- although you can bet many will try -- Capitalism: A Love Story can't be dismissed as a left-wing tirade. Its condemnation of the status quo is too grounded in real stories and real suffering, its targets too evenly spread across the political spectrum. Indeed, Jay Leno, America's designated Everyman, was so moved by the film he insisted that Moore appear on the second night of his new show, and told his audience that the film was "completely nonpartisan... I was stunned by it, and I think it is the most fair film" Moore has done." (Huffington Post; emphasis added)

Michael Moore discusses the film with Olbermann on Countdown:

Read more at: http://www.huffingtonpost.com/arianna-huffington/barack-obama-must-see-mic_b_293407.html

Visit msnbc.com for Breaking News, World News, and News about the Economy

Bail-Out Watchdog & TARP Inspector Neil Barofsky Warns that We Are Now in a "Far More Dangerous Place"

by bartleby the scrivener | From Huffington Post:

"During an interview with the Huffington Post Investigative Fund, Barofsky made some striking observations. Among them were:

1. He found hundreds of banks capable of tracking their use of the TARP money - despite claims by the U.S. Treasury that the task was impossible.
2. If the purpose of the TARP rescue was to increase lending, it has failed.
3. The U.S. financial system, now dependent on bigger and fewer banks, is shakier than ever."  (More; emphasis added)

Our Unreformed Financial System

by bartleby the scrivener | When the economic crisis hit last year, Paul Krugman and other progressives were hopeful that some good might be wrung out of the market's collapse.  What price such gossamer hopes now?   "The end of the world has been postponed," Krugman said at an economic seminar in Helsinki.   

Meanwhile, in an op-ed at NYT, Krugman points out that for the guys who brought about the collapse of Wall Street, it's now pretty much business as before:

"Even as the rest of the nation continues to suffer from rising unemployment and severe hardship, Wall Street paychecks are heading back to pre-crisis levels. And the industry is deploying its political clout to block even the most minimal reforms.

"The good news is that senior officials in the Obama administration and at the Federal Reserve seem to be losing patience with the industry’s selfishness. The bad news is that it’s not clear whether President Obama himself is ready, even now, to take on the bankers."

Obama's a smart guy, so why is he unable to understand the connection between the way the system rewards the financial industry movers and shakers and the need of banks for a massive bailout by American taxpayers?  Even I understand it.

SC Supreme Court Makes an Insurance Company Pay $10 Mil for Wrongfully Revoking Policy of 17 Year Old with HIV (& Other Tales of Health Care Rescission)

by bartleby the scrivener |  Murray Waas has the story:

"The South Carolina Supreme Court has ordered an insurance company to pay $10 million for wrongly revoking the insurance policy of a 17-year-old college student after he tested positive for HIV. The court called the 2002 decision by the insurance company "reprehensible." ....

"In the ruling, Chief Justice Jean Hoefer Toal wrote: "We find ample support in the record that Fortis' conduct was reprehensible ... Fortis demonstrated an indifference to Mitchell's life and a reckless disregard to his health and safety."

"An investigation this summer by the House Energy and Commerce Committee, and earlier ones by state regulators in California, New York and Connecticut, found that thousands of vulnerable and seriously ill policyholders have had their coverage canceled by many of the nation's largest insurance companies without any legal basis. The congressional committee found that three insurance companies alone made at least $300 million over five years from rescission....

House Passes Student Financial Aid Bill to Cut Taxpayer Subsidies to Private Lenders

by Deb Cupples |  Thursday, the U.S. House passed the "Student Aid and Fiscal Responsibility Act of 2009" by 253-171 votes (see roll call).   The bill ends taxpayer subsidies to private lenders in the student-loan business -- which would save us taxpayers an estimated $80+ billion.

Given that our financially shaky nation could use every $80+ billion it can get its hands on, you'd think that ALL Washington politicians would favor ending wasteful subsidies (i.e., welfare) to private lenders -- especially Republican politicians who call themselves fiscal "conservatives."

But noooo: the vote nearly split along party lines, with most House Republicans opposing it. According to the Independent Mail --

"Republicans warned that instead of saving the government money, as Democrats promise, the bill could wind up costing the government more money."

The Ohio 15th District  blog commented:

"The Republicans just can't understand why young people are turning and running away from the Republican Party."

It's downright bizarre that so many Republican politicians claim to be business oriented while failing to grasp a simple, business principle: cutting out a middleman saves money.  Put another way,

Job Market Drop-Outs, Health Insurance, & Other Casualties of the Recession

by Bartleby the Scrivener |  Happy day-after-Labor-Day-2009. According to The New York Times, the recession is worse than it sounds, even when you look at the rising unemployment rate (9.7%).  Those statistics are misleading.  

"To be included in that measure, which is calculated by the Bureau of Labor Statistics from a monthly nationwide survey, a worker must have actively looked for a job at some point in the preceding four weeks.

"For an increasing number of people in this country who would prefer to be working, that is not the case.

"It is difficult to assign an exact figure, because of limitations in the data collected by the bureau, but various measures that capture discouragement have swelled in this recession.

"In the most direct measure of job market hopelessness, the bureau has a narrow definition of a group it classifies as “discouraged workers.” These are people who have looked for work at some point in the past year but have not looked in the last four weeks because they believe that no jobs are available or that they would not qualify, among other reasons. In August, there were roughly 758,000 discouraged workers nationally, compared with 349,000 in November 2007, the month before the recession officially began."  (NYT)

Poll: People Confused about Health Care Reforms -- Perhaps Because Major Players Want to Confuse Them

|by Deb Cupples |  CBS News reports on a poll indicating that 67% of American surveyed are confused about health-care-reform ideas.  This "cuts across party lines": 69% of Republicans and 58% of Democrats are confused.

Funny: they didn't seem so confused in June and July, when 68% - 88% of Americans surveyed simply favored a public, non-profit insurance option (see here and here).

But of course they're confused now!  Some politicians, health-industry executives, and media folks have been clouding issues and muddying the debate.

For example, President Obama has not been consistent or clear about his proposed changes.  Some think he's double-talking.  Others think he's been pandering to the Medical Industrial Complex (I don't know who came up with that phrase, but it's a good one).

Some shameless politicians don't want us hardworking Americans to have the freedom to choose between for-profit insurance (more expensive) and non-profit insurance (less expensive).  Some of them bellowed about make-believe horrors, such as "death panels."

Of course people are getting confused.

Naturally, the folks running health-insurance companies have been paying lobbyists and media folks to scare the dickens out of the very same Americans who would benefit most from true health care reform (e.g., a non-profit insurance option).  They might have had a hand in those staged Townhall protests, too.

Convincing working-class Americans to oppose a non-profit insurance OPTION is like convincing starving people to oppose an option for food. 

Bottom line: insurance execs hate the public option, as it would mean that fewer of our health care dollars would flow into their personal bank accounts.  For a tiny glimpse of how much of our money they've been taking, see the table after the jump.

Reminder: People Did See Housing Bubble Before it Burst

by Deb Cupples |   Via Memeorandum, Paul Rosenberg at Open Left quotes economist Dean Baker, who said this in a paper back in 2002:

"In the last seven years, home sale prices have increased nearly 30 percent more than the overall rate of inflation.... 

"This paper shows that there is no obvious explanation for a sudden increase in the relative demand for housing which could explain the price rise. There is also no obvious explanation for the increase in home purchase prices relative to rental prices. In the absence of any other credible theory, the only plausible explanation for the sudden surge in home prices is the existence of a housing bubble. This means that a major factor driving housing sales is the expectation that housing prices will be higher in the future. While this process can sustain rising prices for a period of time, it must eventually come to an end."

Mr. Baker was not alone in recognizing the bubble before it started deflating.  

From TPMtv: Specter Presiding Over Health Care Reform Ventings at Pennsylvania Town Hall

by bartleby the scrivener |  Right-wingers. Always the irrational anger and the irrational fear. To have free health care like Britain, Canada, and other western nations = "turning into Soviet Russia" and "Maoist China."   The sad thing?  These people are the restrained ones who are sincerely afraid...afraid of health care.   Thank God for making me a Democrat.

Frightening Numbers of Unemployed on the Point of Exhausting Unemployment Benefits

by Teh Nutroots  | According to The New York Times, the only thing standing between many Americans and complete ruin is just about to come to an end. 

Over the coming months, as many as 1.5 million jobless Americans will exhaust their unemployment insurance benefits, ending what for some has been a last bulwark against foreclosures and destitution.

Because of emergency extensions already enacted by Congress, laid-off workers in nearly half the states can collect benefits for up to 79 weeks, the longest period since the unemployment insurance program was created in the 1930s. But unemployment in this recession has proved to be especially tenacious, and a wave of job-seekers is using up even this prolonged aid.

Tens of thousands of workers have already used up their benefits, and the numbers are expected to soar in the months to come, reaching half a million by the end of September and 1.5 million by the end of the year, according to new projections by the National Employment Law Project, a private research group.

There's pressure on Congress to allow a further 13-week extension.  (NYT)  Thirteen weeks?

Worst Comeback Ever: Struggling Americans Fed Up with Giant Windfalls to Investment Bankers

by Bartleby the Scrivener | The good news, I guess, is that corporate welfare recipients Goldman-Sachs, JP Morgan Chase, Citigroup, and Bank of America are all doing splendidly this quarter.  (NYT)  In other words, they went from riches to rags to riches in record time.  Aren't we happy about this?  Shouldn't we feel gratified to see that the public's enforced charity actually did some good -- that these companies pulled themselves up by our bootstraps and stomped off into the sunset, looking exceptionally glossy and well-fed?

Should we hell. 

All of these companies were beneficiaries of gargantuan government bailouts, in assorted forms and varied sums, but if they assumed they’d hear bravos for prompt paybacks and quick turnarounds, they were in for a shock. At a time when so many people are struggling with foreclosures and are either unemployed or worried about losing a job, these earnings were bound to stir up some basic questions of fairness. (NYT)

Yeah, somehow it's all different when it's our wealth they're redistributing (to themselves).  Maybe some of it really will trickle down, but if so, it's likely to be too little and too late for people to connect cause with effect -- always assuming there is a connection.

Of Course the Economy is Still Bad

 by Deb Cupples |  A New York Times editorial states: "Unemployment is rising. Foreclosures are surging. Lending is still constrained."

Duhhh!  How could the scenario be otherwise?  The $700 billion boondoggle (TARP) that George Bush and Henry Paulson sold to Congress (and us taxpayers) last year didn't require banks that took our tax dollars to actually unfreeze credit. 

The TARP legislation didn't even require banks to spend the money wisely or in a way that benefited our nation's economy -- which resulted, in some cases, in our tax dollars funding huge personal pay packages for executives who spent the past few years casting doubt on their own competence.

Tapping Our Economic Potential

by Bill Kavanagh:  Sometimes it’s hard to say you were wrong.  That seems to be the case for President Barack Obama when it comes to fixing the economic meltdown.  Understandably, his Administration misjudged the size of the financial catastrophe during the depths of the freefall.  Then, he presumed that making a compromise deal with the conservatives in his own party and with the Right Wing in the Republican Party on a stimulus bill would unify them, be enough to put Americans back to work—and more importantly, to pull the American economy back from the brink of extinction this winter.  It seems he was only one-third right.

Whatever Happened to Those Banks' Toxic Assets?

by Deb Cupples |  McClatchy tells us:

"In March, Treasury Secretary Timothy Geithner unveiled a Public-Private Investment Program in which the government and private firms would bid together to purchase toxic assets from banks, freeing them to increase lending and help revive the economy.

"The program's still not operating."

As I recall, the program some high-powered experts viewed the PPIP as a win-win for banks and big investors -- but a major downer for us taxpayers (see here and here) -- as it represented a  funneling of undeserved money to the very folks who drove our nation's financial institutions (and economy) into a deep ditch.

John Cole from Baloon Juice has some suggestions regarding the PPIP:

Public Option Needed, Because Private Insurance Execs Have Been Robbing Us

by Deb Cupples |  The Hill reports:

"The healthcare reform bill that emerges from Congress this year will include a government-run public health insurance option, regardless of the bipartisan negotiations seeking a compromise in the Senate, Sen. Chuck Schumer (D-N.Y.) said Sunday....

"The major sticking point between Democrats and Republicans on the Finance Committee -- and throughout Congress -- has been the public option. Democrats maintain that a not-for-profit, nationwide alternative to private insurance must be made available to "keep the insurance companies honest,' Schumer said. 'We don't trust the private insurance companies left to their own devices and neither do the American people.'

"Republicans counter that any government-run plan could not be a fair competitor and predict that the public option would eventually squeeze private companies out of the market."

It should come as no surprise that industry-friendly politicians are using talking points that clash with reality.

With 47 million Americans lacking health overage, isn't it obvious that private insurers have been squeezing themselves out of the market?  Seriously.  Check out the info below:

Krugman Comments on the Nearly Half-Million Jobs lost in June

by Deb Cupples |  The Bureau of Labor Statistics tells us that our nation lost 467,000 jobs last month -- the unemployment rate is at 9.5%.  The number of unemployed persons has increased by 7.2 million since our recession started in December 2007.

In a piece entitled "That 30s Show," Nobel Prize winning economist Paul Krugman expresses  (understandable) concern:

"Since the recession began, the U.S. economy has lost 6 ½ million jobs — and as that grim employment report confirmed, it’s continuing to lose jobs at a rapid pace. Once you take into account the 100,000-plus new jobs that we need each month just to keep up with a growing population, we’re about 8 ½ million jobs in the hole."

Employment Disaster

by Bill Kavanagh:  For those who need convincing that the crisis precipitated by the meltdown is still with us, try on these stats for size:

—Unemployment is currently 9.4%

 —Unemployment will soon top 10%, even by the predictions of economists who believe the recession is ending.

 —There are 14 million Americans now counted as unemployed.

 —There are 30 million Americans who are counted as “underutilized.”

 These are statistics that are derived from official sources.  If one looks at more realistic models that don’t throw out various groups of people no longer even looking for work, or if one doesn’t throw in the armed forces to boost the employment figures, the picture is even bleaker.  It’s worse for young people, men, and—dramatically—for people of color.