Category Archives: The destruction of the middle class

Team Obama Fiddles While Debt Ceiling Fires Burn

Some historical accounts of the Great Fire of Rome, which destroyed three of the city’s fourteen districts and damaged seven others, depict it as an urban redevelopment project gone bad. Emperor Nero allegedly torched the district where he wanted to build his Domus Aurea. Hence any lyre-playing was not a sign of imperial madness, but a badly-informed leader not knowing his plans had spun badly out of control.

President Obama’s plan at social and economic engineering, of rolling back core elements of the Great Deal out of a misguided effort to cut spending in a weak economy, is similarly blazing out of control. The debt ceiling crisis was meant to be a scare to provide an excuse for measures that are opposed by broad swathes of the public. Polls predictably show that voters want five contradictory things before noon: they are against cutting Social Security and care much more about more jobs than about less deficit, but yeah, they’d like that too if they can have it.

While members of the administration may dimly recognize what a firestorm they have unleashed, their crisis responses look to be no better than Nero’s.

Quelle Surprise! Banks Don’t Want to be in IRA Business if They Can’t Treat Customers as Stuffees

If you doubt the public need to be protected from their ~~local mob bosses~~ banks, their latest hissy fit is an admission that they can’t make what they deem to be enough profits unless they take advantage of their customers.

This object lesson is IRAs. Bloomberg reports that if brokerage firms who manage IRAs were required to act as a fiduciary, as in put their customers’ interests first, many would exit the business.

Michael Hudson: Mr. Obama’s Scare Tactics to Get Democrats to Vote for His Republican Wall Street Plan

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City and a research associate at the Levy Economics Institute of Bard College

You know that the debt kerfuffle is as staged as melodramatically as a World Wrestling Federation exhibition when Mr. Obama makes the blatantly empty threat that if Congress does not “tackle the tough challenges of entitlement and tax reform,” there won’t be money to pay Social Security checks next month. In his debt speech last night (July 25), he threatened that if “we default, we would not have enough money to pay all of our bills – bills that include monthly Social Security checks, veterans’ benefits, and the government contracts we’ve signed with thousands of businesses.”

This is not remotely true. But it has become the scare theme for over a week now.

More Shades of TARP: Latest Deficit Ceiling Plan to Establish Extra-Constitutional Legislative Process

We commented last night on the parallels between the pressure tactics used to railroad the passage of the TARP and our current contrived debt ceiling crisis. The similarities have increased in a predictably bad way. Even worse than the economic toll radical budget cutting will impose on ordinary Americans is the continued undermining of basic democratic processes.

Get Ready for TARP 2.0

Washington DC appears to be readying itself for a repeat of the TARP, namely, the passage of unpopular legislation to appease the Market Gods (and transfer even more income from ordinary Americans to the Masters of the Universe). It isn’t yet clear whether this drama will be played out via generating bona fide financial market upheaval or mere threat-mongering (the Treasury market seems pretty confident that well-trained Congresscritters will fall into line). But unlike the TARP, which was a classic example of well-placed interests finding opportunity in the midst of upheaval, this reprise is a far more calculated affair.

Why Liberals are Lame, Part 3: Why a Warren Run for Senate is a Terrible Idea

It’s bad enough that what passes for the left has been kneecapped by the Obama Administration. The ambiguous campaign promise “Change you can believe in” has turned out to be a Nixon-goes-to-China series of moves to the right that would have been well nigh impossible for a Republican to execute without incurring significant costs. Remarkably, Obama has increased both the number and scope of wars, used deficit scaremongering to cut Medicare and Social Security, and passed a health care “reform” bill that made overly expensive American health care even more uneconomical by enriching Big Pharma and health care insurers. And this is only a starter list in his campaign against average Americans.

Those visible moves have been accompanied by a largely stealth operation to neuter what were once called progressive organizations (“progressive” has been rendered meaningless by being adopted by pretty much everyone to the left of Attila the Hun). Groups truly committed to a left-leaning anti-corporate platform quickly learned the cost of crossing Team Obama: in their so-called veal pen, the Administration would get big company backers to yank their funding. This process has now moved up the food chain, but with bigger groups, it is less clear whether the Administration is the driver or whether like minded operatives are acting on their own initiative. Regardless, there is increasingly a vacuum to the left of Obama, which eases his continuing move to the right, as think tanks that are perceived to be reasonably independent, like the Economic Policy Institute, mysteriously lose the backing of significant, established funders.

But what is worse are the self-inflicted wounds. What little remains of the left seems to be rallying around Elizabeth Warren, which given the dearth of prominent figures who are serious about standing up for middle class Americans, as opposed to pandering to them and then selling them out, isn’t a bad impulse per se. But they are deploying their energies in quixotic missions or worse, falling completely in line with the Administration’s plans, which has been to subject Warren to a high end version of the veal pen treatment, to box her in and render her incapable of independent operation. And in case you wonder what I am talking about, I mean the plan, concocted by the Democratic party hackocracy, for her to run for the Senate seat now occupied by Scott Brown.

Summer rerun – If the US stopped issuing treasuries, would it go broke?

This is another summer rerun piece. I wrote the following post “If the U.S. stopped issuing treasuries, would it go broke?” in November 2009. At the time, I was getting to grip with how the government designed constraints in order to prevent deficit spending. What was and still is clear to me is that while […]

The debt ceiling debate as viewed from Europe

Here’s what Germany’s largest daily newspaper Bild Zeitung has to say about the politics in the US around the debt ceiling: "Playing poker is part of politics, as is theatrical posturing. That’s fair enough. But what America is currently exhibiting is the worst kind of absurd theatrics. And the whole world is being held hostage. […]

Doug Smith: The Maximum Wage

By Douglas K. Smith, author of On Value and Values: Thinking Differently About We In An Age Of Me

We face severe and growing income inequality with negative effects on people and the economy. Yet, no surprise, the ‘can’t do’ right wing continues a scorched earth campaign against the minimum wage. These self-promoting haters actually prefer no wages and indentured servitude – for example using prisoners to replace employees and cheerfully promoting ‘internships’ for the unemployed.

They glory in income inequality and wish it to expand instead of contract. Enough of that. They are destroyers of the American Dream.

But people who seek to shrink income inequality — to insure life, liberty and the pursuit of happiness for all and not just some — must now focus as much on the maximum wage as the minimum wage.

So, be it proposed:

“That any enterprise receiving taxpayer funds shall not compensate that enterprise’s highest paid person in an amount greater than twenty-five times what the lowest compensated person receives.”

Marshall Auerback: Time to Panic (II)

By Marshall Auerback, a portfolio strategist and hedge fund manager. Cros posted from New Economic Perspectives.

Today’s unemployment data suggests that we are experiencing something far worse than a mere “bump in the road”, as our President described it last month. In fact, if last month was the time to panic, as Stephanie Kelton argued here, then today’s data should create real palpitations in the White House. This isn’t just a “bump,” but a fully-fledged New York City style pot hole.

The Phantom Bond Market Vigilantes

Assuming current fiscal policies remain in force, our economic model suggests that interest rates will rise considerably over the next decade, with the yield on the 10-year Treasury note reaching nearly 9% by 2021. – Private interest rates will rise as federal borrowing competes for saving that might otherwise finance private investment. – In addition, […]