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Dr. Ravi Batra: New Thinking on the Economy

Sunday, March 22, 2009

By Matt Renner
Truthout


Maverick Southern Methodist University economics professor Ravi Batra says the financial crisis is just one symptom of a long-festering economic disease - a disease caused by neglecting basic economic principles over the past 30 years. Comments made by President Obama seem to echo Dr. Batra's understanding of a domestic economy choked by consumer debt.

"Even as we're focused on the financial system and the credit markets, we are laying the foundation for what I'm calling a post-bubble economic growth market," Obama said Friday afternoon, adding "the days when we are going to be able to grow this economy just on an overheated housing market or people spending - maxing out on their credit cards, those days are over."

Dr. Batra insists that pursuing economic policies that begin to reverse a decline in the real wages of individual consumers is the only way to heal the limping economy. Changes in the "wage-productivity gap" - or the difference between how much consumers earn and the value of goods and services an economy produces - can explain the current situation and can help guide policy-makers out of it.

I spoke with Professor Batra about the current meltdown and how it can be viewed through the lens of the wage-productivity gap....(Click for remainder).

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Bachmann Falsely Claims Her Earmarks Were ‘Very Small’ Compared To ‘Average’ Earmark Cost For Minnesota

By Ben Armbruster
Think Progress


Last week, Rep. Michele Bachmann (R-MN) joined the chorus of members of Congress criticizing the practice of earmarks while requesting their own. Except Bachmann went a bit further, claiming that she has “not taken earmarks in the last three years that I have been in Congress because the system is so corrupt.” In fact, in 2008, Bachmann requested 7 earmarks costing nearly $4 million in taxpayer money.

Bachmann appeared on Fox News this weekend and again railed against earmarks. This time, Bachmann admitted that she had previously taken her own but emphasized that she has taken a “no earmarks pledge.” But when host Brian Wilson challenged the sincerity of her pledge, noting how much Bachmann has requested in earmarks, she tried to downplay the cost, claiming it’s a “very small” amount compared to other Minnesota earmarks:
WILSON: Well, I see a government watchdog group says since you became a member of the House you’ve taken in, oh, $3.7 million in earmarks.

BACHMANN: Well, the average earmark I think for the state of Minnesota for the members of Congress is somewhere around 70,000– $70 million, so mine is very, very small on that level and that’s in the first two years that was in. After I saw the way that the process worked, after being a freshman, I saw how corrupt it was and took an earmark pledge and that’s why I personally have no earmarks in the current budget bill and the stimulus bill that was passed this year.
Watch it:



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Dershowitz needs a refresher course on what McCarthyism was...

By Larisa Alexandrovna
The Huffington Post


Apparently acclaimed attorney Alan Dershowitz does not correctly recall what McCarthyism was.

The esteemed trial lawyer and Harvard professor says the following in defense of John Yoo, of all people:
UC Berkeley leaders are wrestling with that decision as a federal investigation into John Yoo's legal advice to the Bush Administration apparently winds down. The dilemma is rare. At risk are the tenets of academic freedom that have long allowed college faculty members to speak their minds in the name of scholarship. Yoo's case revolves around his advice on dealing with accused terrorists,including a notorious memo that provides legal justification for torture. Yoo, who is temporarily teaching at Orange County's Chapman University, has long attracted protests on his home campus, but some surprising allies have come to his defense.

"I think this is simply a left-wing version of McCarthyism," said Alan Dershowitz, a Harvard Law School professor who disagrees strongly with Yoo's views on torture. "He should be judged solely on the merits of his academics."

But Berkeley administrators and faculty leaders said they would be concerned about Yoo teaching law students if he were found to have violated ethical or legal standards. Critics have called Yoo a yes-man for President George W. Bush, essentially telling him what he wanted to hear.
Dershowitz does not disagree strongly with Yoo on torture as some of you will recall. But that is beside the point. Yoo was hired to teach law. If he has broken the law or broken with ethical standards, then how does that qualify him to teach the topic to law students? But I do remember this argument well, as it has been used before and for the same reasons....(Click for remainder).

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The Heirs of Father Coughlin

By Scott Horton
Harper's Magazine


One of the most important lessons of the Great Depression can be taken from the political, rather than the economic, response. As economic collapse shook the faith of populations a new sort of public figure emerged, one that put a premium on being loud and simple. They soon dominated the airwaves; scapegoating, ridicule, and paranoia were the staples of this new breed, and the nation’s problems were often put on the back of a specific ethnic or religious minority. This wasn’t just a left- or right-wing phenomenon; sometimes it was even a mix of the two. In America this tendency was typified by Father Coughlin, the inventor of hate radio, who commanded a vast audience through the Thirties. Coughlin first championed Franklin Roosevelt and the New Deal and then, in 1934, turned against them, spouting conspiracy theories and anti-Semitism and doing his best to usher America down the aisle taken by Germany and Italy under Hitler and Mussolini.

The voices of Glenn Beck and Rush Limbaugh have much in common with Coughlin. But their message is distinct in many ways—they are not anti-Semitic, for example. And they have different targets for their hatred. But Beck and Limbaugh are more powerful than Coughlin ever was. They have tight ties to the Republican Party and their messages quickly emerge as partisan political dogma.

David Frum, a former speechwriter to President Bush, has focused on the destructive role of the radio hatemongers. They have coarsened the dialogue within the Republican Party and prevented a discussion of the problems that require sorting—in part, no doubt, because they are a significant part of those problems. Ken Silverstein recently quoted Frum’s remarks regarding Limbaugh. Here’s his take on the man whose soaring ratings now position him to be the next Limbaugh, Fox News’s Glenn Beck. Frum first gives us some snippets from a recent Beck special in which he pushed some sinister conspiracy theories surrounding FEMA post-hurricane rescue operations and then explained that a crazed gunman in South Alabama who went on a lethal shooting spree at sites where he had been employed and fired had been “pushed to the wall by political correctness.”...(Click for remainder).

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Climate Change Myths and Facts

By Chris Mooney
The Washington Post


A recent controversy over claims about climate science by Post op-ed columnist George F. Will raises a critical question: Can we ever know, on any contentious or politicized topic, how to recognize the real conclusions of science and how to distinguish them from scientific-sounding spin or misinformation?

Congress will soon consider global-warming legislation, and the debate comes as contradictory claims about climate science abound. Partisans of this issue often wield vastly different facts and sometimes seem to even live in different realities.

In this context, finding common ground will be very difficult. Perhaps the only hope involves taking a stand for a breed of journalism and commentary that is not permitted to simply say anything; that is constrained by standards of evidence, rigor and reproducibility that are similar to the canons of modern science itself.

Consider a few of Will's claims from his Feb. 15 column, "Dark Green Doomsayers": In a long paragraph quoting press sources from the 1970s, Will suggested that widespread scientific agreement existed at the time that the world faced potentially catastrophic cooling. Today, most climate scientists and climate journalists consider this a timeworn myth. Just last year, the Bulletin of the American Meteorological Society published a peer-reviewed study examining media coverage at the time and the contemporary scientific literature. While some media accounts did hype a cooling scare, others suggested more reasons to be concerned about warming. As for the published science? Reviewing studies between 1965 and 1979, the authors found that "emphasis on greenhouse warming dominated the scientific literature even then."...(Click for remainder).

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Washington Post Joins The "Pity The Bankers" Theme

By Chris in Paris
AMERICAblog


Oh please. Let's get a few points straight before I see yet another "poor bankers" story. The bankers are hardly talking with a hostile Washington. Their friends are all over Congress, the White House and Treasury. For goodness sakes, Obama's team is flooded with former Citi people and Geithner has consistently eased up on every attempt to push back on Wall Street. Congress has dithered for months and then acts surprised when the country discovers they looked the other way. Even now, they're doing nothing, so don't tell me that Washington is unfriendly territory for Wall Street.

And as far as the bankers providing value and "it's only a few that are ruining it for everyone" I call BS. The pay throughout these companies at all levels has consistently been above other industries. There has been no link between high pay and high performance. It's been no risk (for bankers) and high pay. Performance has had little to do with pay and no, there has not been any great value to the public. The public has only been on the downside of this scheme.

For the belly-aching bankers they have plenty of choices. They can live with the real world or quit. Quit their Wall Street jobs. Quit the industry. Quit whatever and go find work elsewhere and see how well it pays compared to being a fuckup on Wall Street. Quit insisting on the critical value-add delivered because it's called bailout, future inflation and a global recession. This pity party for bankers throughout the media is infuriating to read and remains unconvincing. Obviously the banks are now spending their bailout money on PR campaigns which is salt on the wound. If only the "liberal media" didn't play along with the game....(Click for remainder).

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Sugar Is Back on Food Labels, This Time as a Selling Point


By Kim Severson
The New York Times


Sugar, the nutritional pariah that dentists and dietitians have long reviled, is enjoying a second act, dressed up as a natural, healthful ingredient.

From the tomato sauce on a Pizza Hut pie called “The Natural,” to the just-released soda Pepsi Natural, some of the biggest players in the American food business havestarted, in the last few months, replacing high-fructose corn syrup with old-fashioned sugar.

ConAgra uses only sugar or honey in its new Healthy Choice All Natural frozen entrees. Kraft Foods recently removed the corn sweetener from its salad dressings, and is working on its Lunchables line of portable meals and snacks.

The turnaround comes after three decades during which high-fructose corn syrup had been gaining on sugar in the American diet. Consumption of the two finally drew even in 2003, according to the Department of Agriculture. Recently, though, the trend has reversed. Per capita, American adults ate about 44 pounds of sugar in 2007, compared with about 40 pounds of high-fructose corn syrup.

“Sugar was the old devil, and high-fructose corn syrup is the new devil,” said Marcia Mogelonsky, a senior analyst at Mintel International, a market-research company.

With sugar sales up, the Sugar Association last year ended its Sweet by Nature campaign, which pointed out that sugar is found in fruits and vegetables, said Andy Briscoe, president of the association. “Obviously, demand is moving in the right direction so we are taking a break,” Mr. Briscoe said....(Click for remainder).

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The Death and Life of Great American Newspapers

By John Nichols and Robert W. McChesney
The Nation


Communities across America are suffering through a crisis that could leave a dramatically diminished version of democracy in its wake. It is not the economic meltdown, although the crisis is related to the broader day of reckoning that appears to have arrived. The crisis of which we speak involves more than mere economics. Journalism is collapsing, and with it comes the most serious threat in our lifetimes to self-government and the rule of law as it has been understood here in the United States.

After years of neglecting signs of trouble, elite opinion-makers have begun in recent months to recognize that things have gone horribly awry. Journals ranging from Time, The New Yorker, The Atlantic and The New Republic to the New York Times and the Los Angeles Times concur on the diagnosis: newspapers, as we have known them, are disintegrating and are possibly on the verge of extinction. Time's Walter Isaacson describes the situation as having "reached meltdown proportions" and concludes, "It is now possible to contemplate a time in the near future when major towns will no longer have a newspaper and when magazines and network news operations will employ no more than a handful of reporters." A newspaper industry that still employs roughly 50,000 journalists--the vast majority of the remaining practitioners of the craft--is teetering on the brink.

Blame has been laid first and foremost on the Internet, for luring away advertisers and readers, and on the economic meltdown, which has demolished revenues and hammered debt-laden media firms. But for all the ink spilled addressing the dire circumstance of the ink-stained wretch, the understanding of what we can do about the crisis has been woefully inadequate. Unless we rethink alternatives and reforms, the media will continue to flail until journalism is all but extinguished....(Click for remainder).

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Top Geithner Aide Fought CEO Pay Reform

As a Goldman Sachs lobbyist, Mark Patterson once worked against a bill to curb executive compensation. The legislation's sponsor: Barack Obama.

By David Corn and Jonathan Stein
Mother Jones


On Wednesday afternoon, as President Barack Obama was leaving the White House for a town hall meeting in California, he spoke for 15 minutes to reporters about the AIG controversy. Responding to the rising rage over the $165 million or so in bonuses paid to executives at the bailed-out insurance firm, Obama noted that he was quickly developing policies to prevent future AIG-like catastrophes. And he slammed Wall Street's culture of "excess greed, excess compensation, excess risk taking." To demonstrate that he's committed to battling such greed, the president cited his work in the Senate to rein in executive compensation. Noting that he and Rep. Barney Frank (D-Mass.) had each introduced legislation on this front in 2007, Obama declared that "there were some people who attacked us, saying government has no business doing that."

One of Obama's opponents at that time was Mark Patterson, a lobbyist then for Goldman Sachs, the investment banking firm, which opposed the Frank-Obama initiative. Yet Patterson is now chief of staff to Treasury Secretary Timothy Geithner, the embattled point man in the Obama administration's endeavor to undo the notorious AIG bonuses. That is, a Washington influence-peddler who worked against Obama's effort to limit excessive corporate pay is now a key member of the Obama administration team that is supposed to contain excessive compensation in the AIG case and in general.

In 2007, Frank, the chairman of the House financial services committee, introduced H.R. 1257, the Shareholder Vote on Executive Compensation Act. The bill required public companies to allow shareholders to hold nonbinding votes on executive compensation plans. The measure—dubbed "say on pay"—was a modest step, though only one of the few attempts then to address exorbitant salaries. It did not limit pay for corporate managers; the legislation would merely permit shareholders to express their displeasure with compensation packages. Corporations would be free to ignore the outcomes of these symbolic votes. Still, the banking industry opposed the bill. And Goldman Sachs, for which Patterson was a registered lobbyist from September 2005 to April 2008, was no fan of "say on pay." Sachs' chief executive, Lloyd Blankfein, who took home at least $70 million in 2007, has argued that shareholders are "less sophisticated and have less understanding" of compensation issues than corporate board members....(Click for remainder).

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Forget the bonuses: AIG can't repay its loans, GAO says

By Kevin G. Hall
McClatchy Newspapers


WASHINGTON — Lost in all the shouting over the $165 million in bonuses paid to executives of disgraced insurer American International Group was this sober message delivered to Congress on Wednesday by a government watchdog: AIG's ability repay its $170 billion in loans from taxpayers has eroded significantly.

Testifying before Congress, Orice Williams, the director of the Government Accountability Office's financial markets division, said that AIG has had only limited success in restructuring itself, despite more than $170 billion in federal aid in four separate bailouts since last September.

"AIG's ability to repay its obligations to the federal government also has been impaired by its deteriorating operations, its inability to sell its assets and by further declines in its assets," said a GAO report that was released with Williams' testimony.

When the Federal Reserve rescued AIG in September with an original $85 billion loan that gave the government a nearly 80 percent equity stake in the company, the intention was to prevent rating agencies from further downgrading AIG.

Ratings downgrades would've forced AIG to pay business partners much more collateral on a range of complex financial instruments, leaving one of the world's biggest insurers short of cash and thus technically insolvent. Insolvency could've triggered bank failures across the globe as the company's lightly regulated Financial Products division had obligations from its global transactions exceeding $1 trillion....(Click for remainder).

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GOP Continues To Do Bidding of Corporate Masters

Ah, it's nice to see that the GOP is still willing to do the bidding of their corporate masters even when the public is OVERWHELMINGLY opposed to these bonuses. Good on ya Republicants.

By Laurie Kellman and Stephen Ohlemacher
Associated Press via Yahoo! News


WASHINGTON – Senate Republicans are drawing out a flap that has made the Obama administration squirm, applying the brakes to Democratic attempts to quickly tax away most of the bonuses at troubled insurance giant AIG and other bailed-out companies.

Sen. Jon Kyl, the Republicans' vote counter, blocked Democratic efforts Thursday evening to bring up the Senate version of the tax bill to recoup most of the $165 million paid out by AIG last weekend and other bonuses in 2009. The House had swiftly approved its version of the bill earlier in the day.

By rushing, Kyl said, Democrats were letting populist outrage trump informed decision-making in the Senate, which is supposed to be insulated from the pressures of public passion.

"I don't believe that Congress should rush to pass yet another piece of hastily crafted legislation in this very toxic atmosphere, at least without understanding the facts and the potential unintended consequences," Kyl said on the Senate floor. "Frankly, I think that's how we got into the current mess."

Senate Democrats said they will try again next week to take up the tax bill and hope to complete it before April 4, when Congress leaves for a two-week spring break. Combining the disparate House and Senate versions of the bill might have to wait until after the recess.

The Senate voted last month to block the bonuses at AIG and other companies as part of the $787 billion stimulus bill, but Democrats then watered down the measure allowing them after Treasury Department officials warned that the move could trigger lawsuits against the government.

Last week, when Treasury Secretary Tim Geithner couldn't talk AIG out of paying the bonuses, Republicans were quick to blame Democrats, pointing out that they were in charge of Congress and the department when the decision was made about bonuses and the stimulus bill. Democrats sought to regain the offensive — and stem the political damage — with promises to tax the bonuses away....(Click for remainder).

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Congressman Offers Preemptive Apology for Extra-Marital Affair


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White House seeks broad new authority to reform financial system

By Jed Lewison
Daily Kos


This is going to drive Republicans Rush Limbaugh crazy:
Administration Seeks Increase in Oversight of Executive Pay

WASHINGTON — The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.

The outlines of the plan are expected to be unveiled this week in preparation for President Obama’s first foreign summit meeting in early April.

Increasing oversight of executive pay has been under consideration for some time, but the decision was made in recent days as public fury over bonuses has spilled into the regulatory effort.

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could range beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

One proposal could impose greater requirements on the boards of companies to tie executive compensation more closely to corporate performance and to take other steps to assure that outsize bonuses are not paid before meeting financial goals.
This proposal is no joke. It isn't limited to just AIG, or even just TARP recipients. It aims at a fundamental overhaul of the way things work at financial institutions and publicly traded companies, not only with respect to executive compensation, but also in terms of how complex financial instruments like derivatives are regulated....(Click for remainder).

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Big Money Fuels Fight Over Labor Bill

By Daphne Eviatar
The Washington Independent


The nonpartisan money-in-politics-tracking Website, OpenSecrets.org, has an eye-opening roundup of the money spent in support or opposition the Employee Free Choice Act, introduced in Congress yesterday.

The bill, which would allow employees to form a union if they can gather signatures from a majority of workers, rather than being required also to hold a formal election weeks after collecting the signed cards, is virulently opposed by business groups, who fear they’ll lose the ability to sway workers against the union option. (The law would also increase penalties against employers who mistreat workers for trying to unionize.)

According to OpenSecrets, “Business [Political Action Committees] not only gave nearly five times more in campaign contributions than labor PACs did in the last election cycle ($365.1 million versus $77.9 million, including contributions to leadership PACs) they are backed by the U.S. Chamber of Commerce, which spent $144.4 million on lobbying efforts in the 2007-2008 election cycle, or more than $400,000 for every day Congress was in session. By contrast, the entire labor sector spent less than $84 million on lobbying efforts during those two years.”

All that lobbying by big business has certainly won the support of some Republicans, who have conveniently misrepresented the bill as “taking away the secret ballot” from employees — as opposed to offering them another, far simpler option for how to form a union.

For example, at a fundraising stop Monday in his home state, Sen. Arlen Specter (R-Pa.) said that “jobs are being exported. We have problems with pensions and health care. To take away the secret ballot is big stuff. I’m listening to all of the viewpoints very carefully. I have a hunch we’ll vote this spring.”

And Sen. John McCain (R-Ariz.) called it “a threat to one of the fundamentals of democracy.”

Meanwhile, some Democrats who’ve supported the bill in the past aren’t signing onto it now. Even key Senate Democrats are wavering in their support, The Wall Street Journal reports.

That’s likely because it’s so easy to distort what the bill says, and why. As Rachel Maddow explained on her MSNBC show the other night, in the most coherent and straightforward discussion I’ve heard yet of this bill, the purpose of the Employee Free Choice Act is to allow employees to form a union without having to endure weeks of intimidation by their bosses. The “card check” option, as it’s called, means employees can just sign a card to vote for the union, if they want to do that. (As Maddow explains, contrary to the Republicans’ claims, the law explicitly allows them to have a secret ballot, too, if they want one.)...(Click for remainder).

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Fox Business News responsible for 50% drop in Dow



By Jed Lewison
Daily Kos


In response to a post about how Fox News falsely claimed the Dow dropped 56 points during a speech by President Obama, an e-mailer offers up a snarky question (subject line Fauxviating):
So what has the DOW done since Faux came into existence?
Obviously, the question mocks Fox's favorite sport, highlighting (or inventing) drops in the Dow while a Democrat speaks.

Just for the record, Fox Business News had its first broadcast on October 15, 2007. The previous close was 14,093.08.

In other words, since Fox Business News came into existence, the Dow has dropped nearly 50%.

So if you're wondering which business network has caused the most damage to the nation's economy, move over CNBC! It's Fox Business News!*

(*Either that, or correlation does not equal causation.)

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