Wishing Krugman Story Were True
By ROSS KAMINSKY on 3.11.13
The American Spectator

Earlier this morning, Breitbart News had posted an article about Paul Krugman filing for bankruptcy after years of lavish spending, seeming to show the irony of someone recommending big spending being done in by those policies on a personal level.

It is a story that has been making its way around the web for a few days, and was picked up at the relatively reputable Boston.com except that it appears to have been posted by a blogger rather than a reporter. That blogger picked up the story from an Austrian magazine, Format. The Austrian magazine noted at the end of the piece that they got the story from the web site The Daily Currant which is a satire site, like an online version of The Onion.

In short, the story about Krugman going bankrupt is an amusing bit of satire, one which many non-leftists might hope to be true — but which isn’t true.

If you see the story being passed around as fact, you are now armed with the truth. I don’t like seeing “our side” passing around untruths because it makes us seem less credible. To be clear, the story was obviously explicitly satire given the source, and the fault with making it seem as if it were a real story lies with those who aren’t doing the one minute of fact-checking needed to recognize where it came from.

Turns out yesterday would have been Ronald Reagan's 101st birthday. In all the excitement over the tsunami of Santorum that engulfed the country, it plumb got right by me. So, let me say, in my own belated way, and because behind-the-times was the basis for Reagan's entire career, happy birthday, ya silly old coot.

How do you like your party now, Ronnie? A Mormon everyone hates, a world-historical balloon animal 10 years past his sell-by date, a survivalist crank from Texas, and a guy who is pretty much a dick. That's the party you and your boys created. That's the end product of the "conservative movement" of which you were the amiable and occasionally coherent figurehead, a prop in your own life. You know how you know that's the case, Ronnie? Look how hard they're trying to memorialize you in concrete and marble. They stuck your name on National Airport, and on the biggest and ugliest building in Washington, D.C., to celebrate your devotion to smaller government...

Reagan, Class and Organized Labor: "One Of The Most Damaging Presidents In American History"

In the late 1940’s, as president of the Screen Actors’ Guild union, Ronald Reagan testified before the House Un-American Activities Committee on so-called "subversive activity" in Hollywood, reporting on actors, directors, and screenwriters deemed Communist sympathizers.

And in the 1960’s and 70’s, as Governor of the State of California, Reagan fought the efforts of migrant farm workers to win union contracts, vetoing the Agricultural Labor Relations Act, a bill granting farm workers collective bargaining rights. In one well-publicized episode, then-Governor Reagan appeared on television eating grapes in defiance of a union-sponsored boycott against miserable working conditions in California’s vineyards.

In August of 1981, thirteen thousand members of the Professional Air Traffic Controllers Organization, or PATCO, ignored federal laws prohibiting strikes and walked off the job in protest of long shifts and mandatory overtime...

Two days later, Reagan made good on his promise, firing more than eleven thousand air traffic controllers, jailing strike leaders and ultimately abolishing the union. It was the first time in U.S. history that permanent replacement workers had been used on such a wide scale to break a strike...

Reagan Was a Keynesian
by Paul Krugman
The New York Times
June 8, 2012

There’s no question that America’s recovery from the financial crisis has been disappointing. In fact, I’ve been arguing that the era since 2007 is best viewed as a “depression,” an extended period of economic weakness and high unemployment that, like the Great Depression of the 1930s, persists despite episodes during which the economy grows. And Republicans are, of course, trying — with considerable success — to turn this dismal state of affairs to their political advantage.

They love, in particular, to contrast President Obama’s record with that of Ronald Reagan, who, by this point in his presidency, was indeed presiding over a strong economic recovery. You might think that the more relevant comparison is with George W. Bush, who, at this stage of his administration, was — unlike Mr. Obama — still presiding over a large loss in private-sector jobs. And, as I’ll explain shortly, the economic slump Reagan faced was very different from our current depression, and much easier to deal with. Still, the Reagan-Obama comparison is revealing in some ways. So let’s look at that comparison, shall we?...

OBAMA AND THE BUSH LEGACY: A SCORECARD
by John Cassidy
The New Yorker
June 1, 2012
 

With two George Bushes and their wives visiting the White House today for the unveiling of George W.’s official portrait, how much of the Bush legacy remains in place? The election of 2008 was a classic “time for a change” contest, in which Americans picked a fresh-faced young senator to replace an increasingly haggard and unpopular President. Three and a half years later, what’s different?

Some things are; some aren’t. Here is a quick (and far from definitive) scorecard. But first, a warning: this isn’t an exercise in judging Obama. In some areas, such as dealing with the Supreme Court, he was powerless to undo Bush’s handiwork. In other areas, such as Afghanistan, he set out to complete Bush’s agenda rather than overturn it. But it’s always interesting to compare Presidencies and to try and figure out what, if anything, they leave behind that’s lasting. So here goes...

Let Detroit Go Bankrupt
by Mitt Romney
The New York Times
November 18, 2008

IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check...

America’s Leftward Tilt?

by Drew Westen
The New York Times
November 3, 2012

The obvious story line of this election, whoever wins, is that Americans want pragmatic solutions to the relentless distress they have experienced for over a decade, whether that means a more active or a more passive government. They are looking for anyone who can provide a coherent vision of how to fix an economy that is not working for people who work for a living. But rather than a victory for pragmatism, we may well see both the winners and losers take away a very different lesson: that this election was a mandate for another shift to the right...

The reality is that our government hasn’t become this dysfunctional because the parties are so “polarized.” It’s because there is only one pole in American politics today, and its magnetic field is so powerful that it has drawn both parties in the same direction — rightward. And it is in that same direction that the magnetic field of contemporary American politics is likely to pull the stories the two parties tell after the election — and the policies the winner pursues...

A majority of Americans still holds Bush accountable for the Great Recession, and with good reason. We are still breathing the fumes of his toxic brew of deregulation, massive transfers of wealth to the rich and a doubling of the national debt. His policies, and those of a Republican Congress that had its way with the economy for six years, were in fact the culmination of a right-wing ideological revolution led by Ronald Reagan, which changed the way Americans view their government. Mr. Reagan’s shadow continues to loom large, because Democrats have yet to make the case for a compelling alternative and have too often accepted the premises of the right...

But too often the consensus among the parties is that the solution to what ails us is deficit cutting and attacks on, or failure to support, the unions that gave us the weekend, 20th-century benefits and the eight-hour day. Both candidates have implicitly or explicitly blamed “public employees” with their “bloated pensions” and waste-filled jobs for our economic woes (with Mr. Obama sending a signal by freezing the pay of federal workers, as if tightening their belts would somehow loosen the noose around the Treasury)...

Austerity has been a failure almost everywhere governments have tried it, with Spain, where one in four working people is no longer working, being the most recent example. Both parties preach the gospel of free trade, which polls poorly because ordinary Americans can see with their own eyes how we have freely traded the good American wages and benefits away...

When Americans saw the scope of the savings and loan scandal in the 1980s, which today seems like just a bad day on the unregulated derivatives market, Ronald Reagan’s attorney general, Edwin Meese III, put nearly a thousand bankers behind bars. In contrast, Mr. Obama’s attorney general, Eric H. Holder Jr., can’t seem to smell the stench of a fraud that cost millions of people their jobs or homes...

For years, even Republicans accepted the premises of the New Deal, which drew them leftward just as today’s political winds blow everything in their path rightward. President Dwight D. Eisenhower created the Interstate highway system. President Richard M. Nixon created the Environmental Protection Agency. Neither believed in the radical dismantling of programs that protected ordinary Americans, and both believed that a crucial role of government is to provide the infrastructure that makes economic prosperity possible.

Then came the conservative movement that ushered in Reagan, whose ideology has dominated our political discourse ever since, even after its proven failure.

Fed Board Member Conflicts Detailed by GAO: Banks and Businesses Took $4 Trillion in Bailouts

WASHINGTON, June 12 — More than $4 trillion in near zero-interest Federal Reserve loans and other financial assistance went to the banks and businesses of at least 18 current and former Federal Reserve regional bank directors in the aftermath of the 2008 financial collapse, according to Government Accountability Office records made public for the first time today by Sen. Bernie Sanders.

On the eve of Senate testimony by JPMorgan Chase CEO Jamie Dimon, Sanders (I-Vt.) released the detailed findings on Dimon and other Fed board members whose banks and businesses benefited from Fed actions...

To read a report summarizing the new GAO information, click here.

Egos and Immorality
by Paul Krugman
The New York Times
May 24, 2012

In the wake of a devastating financial crisis, President Obama has enacted some modest and obviously needed regulation; he has proposed closing a few outrageous tax loopholes; and he has suggested that Mitt Romney’s history of buying and selling companies, often firing workers and gutting their pensions along the way, doesn’t make him the right man to run America’s economy.

Wall Street has responded — predictably, I suppose — by whining and throwing temper tantrums. And it has, in a way, been funny to see how childish and thin-skinned the Masters of the Universe turn out to be. Remember when Stephen Schwarzman of the Blackstone Group compared a proposal to limit his tax breaks to Hitler’s invasion of Poland? Remember when Jamie Dimon of JPMorgan Chase characterized any discussion of income inequality as an attack on the very notion of success?

But here’s the thing: If Wall Streeters are spoiled brats, they are spoiled brats with immense power and wealth at their disposal. And what they’re trying to do with that power and wealth right now is buy themselves not just policies that serve their interests, but immunity from criticism...

Dimon’s Déjà Vu Debacle
by Paul Krugman
The New York Times
May 21, 2012

Sometimes it’s hard to explain why we need strong financial regulation — especially in an era saturated with pro-business, pro-market propaganda. So we should always be grateful when someone makes the case for regulation more compelling and easier to understand. And this week, that means offering a special shout-out to two men: Jamie Dimon and Mitt Romney.

I’ll come back shortly to the troubles at JPMorgan Chase, the bank Mr. Dimon runs. First, however, let me talk about Mr. Romney, whose remarks about those troubles were so off-point that they constitute a teachable moment...

Needy States Use Housing Aid Cash to Plug Budgets
by Shaila Dewan
The New York Times
May 16, 2012
 

Hundreds of millions of dollars meant to provide a little relief to the nation’s struggling homeowners is being diverted to plug state budget gaps.

In a budget proposed this week, California joined more than a dozen states that want to help close gaping shortfalls using money paid by the nation’s biggest banks and earmarked for foreclosure prevention, investigations of financial fraud and blunting the ill effects of the housing crisis. California was awarded more than $400 million from the banks, and Gov. Jerry Brown has proposed using the bulk of that sum to pay the state’s debts.

The money was part of a national settlement valued at $25 billion and negotiated with five big banks over abuses in their mortgage and foreclosure processes.

The settlement, reached in February after a year of talks and intervention by the Obama administration, was the second-largest in history involving the states, trailing the tobacco industry settlement, and represented the first large-scale commitment by banks to provide direct aid to borrowers.

As part of the settlement, the banks agreed to pay the states $2.5 billion, money intended to help homeowners and mitigate the effects of the foreclosure surge. But critics complained that this was the only cash the banks were required to pay — the rest comes in the form of “credits” for reducing mortgage debt and other activities. Even that relatively small amount has proved too great a temptation for lawmakers...

Why We Regulate
by Paul Krugman
The New York Times
May 14, 2012
 

One of the characters in the classic 1939 film “Stagecoach” is a banker named Gatewood who lectures his captive audience on the evils of big government, especially bank regulation — “As if we bankers don’t know how to run our own banks!” he exclaims. As the film progresses, we learn that Gatewood is in fact skipping town with a satchel full of embezzled cash.

As far as we know, Jamie Dimon, the chairman and C.E.O. of JPMorgan Chase, isn’t planning anything similar. He has, however, been fond of giving Gatewood-like speeches about how he and his colleagues know what they’re doing, and don’t need the government looking over their shoulders. So there’s a large heap of poetic justice — and a major policy lesson — in JPMorgan’s shock announcement that it somehow managed to lose $2 billion in a failed bit of financial wheeling-dealing.

Just to be clear, businessmen are human — although the lords of finance have a tendency to forget that — and they make money-losing mistakes all the time. That in itself is no reason for the government to get involved. But banks are special, because the risks they take are borne, in large part, by taxpayers and the economy as a whole. And what JPMorgan has just demonstrated is that even supposedly smart bankers must be sharply limited in the kinds of risk they’re allowed to take on.

Why, exactly, are banks special? Because history tells us that banking is and always has been subject to occasional destructive “panics,” which can wreak havoc with the economy as a whole. Current right-wing mythology has it that bad banking is always the result of government intervention, whether from the Federal Reserve or meddling liberals in Congress. In fact, however, Gilded Age America — a land with minimal government and no Fed — was subject to panics roughly once every six years. And some of these panics inflicted major economic losses...

Easy Useless Economics
by Paul Krugman
The New York Times
May 11, 2012

A few days ago, I read an authoritative-sounding paper in The American Economic Review, one of the leading journals in the field, arguing at length that the nation’s high unemployment rate had deep structural roots and wasn’t amenable to any quick solution. The author’s diagnosis was that the U.S. economy just wasn’t flexible enough to cope with rapid technological change. The paper was especially critical of programs like unemployment insurance, which it argued actually hurt workers because they reduced the incentive to adjust.

O.K., there’s something I didn’t tell you: The paper in question was published in June 1939. Just a few months later, World War II broke out, and the United States — though not yet at war itself — began a large military buildup, finally providing fiscal stimulus on a scale commensurate with the depth of the slump. And, in the two years after that article about the impossibility of rapid job creation was published, U.S. nonfarm employment rose 20 percent — the equivalent of creating 26 million jobs today.

So now we’re in another depression, not as bad as the last one, but bad enough. And, once again, authoritative-sounding figures insist that our problems are “structural,” that they can’t be fixed quickly. We must focus on the long run, such people say, believing that they are being responsible. But the reality is that they’re being deeply irresponsible...

Anyway, John Maynard Keynes had these peoples’ number more than 80 years ago. “But this long run,” he wrote, “is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the sea is flat again.”

I would only add that inventing reasons not to do anything about current unemployment isn’t just cruel and wasteful, it’s bad long-run policy, too. For there is growing evidence that the corrosive effects of high unemployment will cast a shadow over the economy for many years to come. Every time some self-important politician or pundit starts going on about how deficits are a burden on the next generation, remember that the biggest problem facing young Americans today isn’t the future burden of debt — a burden, by the way, that premature spending cuts probably make worse, not better. It is, rather, the lack of jobs, which is preventing many graduates from getting started on their working lives.

So all this talk about structural unemployment isn’t about facing up to our real problems; it’s about avoiding them, and taking the easy, useless way out. And it’s time for it to stop.

The following is excerpted from a new book by Paul Krugman called End This Depression Now!

CHAPTER ONE: HOW BAD THINGS ARE

I think as those green shoots begin to appear in different markets and as some confidence begins to come back that will begin the positive dynamic that brings our economy back.

Do you see green shoots?

I do. I do see green shoots.

—Ben Bernanke, chairman of the Federal Reserve, interviewed by 60 Minutes, March 15, 2009

 

In March 2009 Ben Bernanke, normally neither the most cheerful nor the most poetic of men, waxed optimistic about the economic prospect. After the fall of Lehman Brothers six months earlier, America had entered a terrifying economic nosedive. But appearing on the TV show 60 Minutes, the Fed chairman declared that spring was at hand.

His remarks immediately became famous, not least because they bore an eerie resemblance to the words of Chance, aka Chauncey Gardiner, the simpleminded gardener mistaken for a wise man in the movie Being There. In one scene Chance, asked to comment on economic policy, assures the president, "As long as the roots are not severed, all is well and all will be well in the garden. . . . There will be growth in the spring." Despite the jokes, however, Bernanke's optimism was widely shared. And at the end of 2009 Time declared Bernanke its Person of the Year.

Unfortunately, all was not well in the garden, and the promised growth never came.

To be fair, Bernanke was right that the crisis was easing. The panic that had gripped financial markets was ebbing, and the economy's plunge was slowing. According to the official scorekeepers at the National Bureau of Economic Research, the so-called Great Recession that started in December 2007 ended in June 2009, and recovery began. But if it was a recovery, it was one that did little to help most Americans. Jobs remained scarce; more and more families depleted their savings, lost their homes, and, worst of all, lost hope. True, the unemployment rate is down from the peak it reached in October 2009. But progress has come at a snail's pace; we're still waiting, after all these years, for that "positive dynamic" Bernanke talked about to make an appearance.

And that was in America, which at least had a technical recovery. Other countries didn't even manage that. In Ireland, in Greece, in Spain, in Italy, debt problems and the "austerity" programs that were supposed to restore confidence not only aborted any kind of recovery but produced renewed slumps and soaring unemployment...

Austerity Is So Wrong!
by Paul Krugman
The Daily Beast
May 6, 2012

In the scary months that followed the fall of Lehman Brothers, just about all major governments agreed that the sudden collapse of private spending had to be offset, and they turned to expansionary fiscal and monetary policy—spending more, taxing less, and printing lots of monetary base—in an effort to limit the damage. In so doing, they were following the advice of standard textbooks; more important, they were following the hard-earned lessons of the Great Depression.

But a funny thing happened in 2010: much of the world’s policy elite—the bankers and financial officials who define conventional wisdom—decided to throw out the textbooks and the lessons of history, and declare that down is up. That is, it quite suddenly became the fashion to call for spending cuts, tax hikes, and even higher interest rates even in the face of mass unemployment...

Why the Economy is Heading for a Stall
by Robert Reich on his blog
May 3, 2012

What’s going on? Europe is sliding into recession, and gas prices are still high. But the real problem lies closer to home. Cuts in government spending are reducing domestic demand precisely at the time when consumers are reaching the end of their ropes and can’t spend more.

Consumers did all the spending they could in the first quarter. Household purchases increased 2.9 percent between January and March. That was the biggest increase since the last quarter of 2010.

Absent real wage gains, that spending pace can’t possibly continue. Consumer savings are down and their debt is up. Consumer confidence dropped last week to a two-month low.

The only people left spending are in the top 5 percent, whose stock portfolios have been doing so well they feel even richer. But the top 5 percent can’t pull the entire economy out of the doldrums. Besides, if demand continues to slide the stock market will follow.

The real problem is political, not economic. Republicans in Congress insist on cutting public spending even before the economy has mended...

Paul Krugman on How to Fix the Economy — and Why It's Easier Than You Think
by Julian Brookes
RollingStone
May 2, 2012

We've been here before, Krugman argues, during the Great Depression, and the actions that got us out of that crisis will get us out of this one, too.

The basic issue, says Krugman, is a lack of demand. American consumers and businesses, aren't spending enough, and efforts to get them to open their wallets have gone nowhere. Krugman's solution: The federal government needs to step in and spend. A lot. On debt relief for struggling homeowners; on infrastructure projects; on aid to states and localities; on safety-net programs. Call it "stimulus" if you like. Call it Keynesian economics, after the great economic thinker (and Krugman idol) John Maynard Keynes, who first championed the idea that government has an essential role in saving the free market from its own excesses. Whatever you call it, it worked in the late nineteen-thirties and forties, when the U.S. government started shelling out on the military in the build-up to World War II, bringing an abrupt end to years of economic misery and laying the foundation for decades of prosperity. Krugman is not calling for an increase in military spending, much less a global war! But the WWII example shows that large-scale government spending can kick-start the economy. It worked then, he says, and it will work now...

Welcome to the Asylum
by Chris Hedges
Truthdig
April 30, 2012

When civilizations start to die they go insane. Let the ice sheets in the Arctic melt. Let the temperatures rise. Let the air, soil and water be poisoned. Let the forests die. Let the seas be emptied of life. Let one useless war after another be waged. Let the masses be thrust into extreme poverty and left without jobs while the elites, drunk on hedonism, accumulate vast fortunes through exploitation, speculation, fraud and theft. Reality, at the end, gets unplugged. We live in an age when news consists of Snooki’s pregnancy, Hulk Hogan’s sex tape and Kim Kardashian’s denial that she is the naked woman cooking eggs in a photo circulating on the Internet. Politicians, including presidents, appear on late night comedy shows to do gags and they campaign on issues such as creating a moon colony. “At times when the page is turning,” Louis-Ferdinand Celine wrote in “Castle to Castle,” “when History brings all the nuts together, opens its Epic Dance Halls! hats and heads in the whirlwind! Panties overboard!”

The quest by a bankrupt elite in the final days of empire to accumulate greater and greater wealth, as Karl Marx observed, is modern society’s version of primitive fetishism. This quest, as there is less and less to exploit, leads to mounting repression, increased human suffering, a collapse of infrastructure and, finally, collective death. It is the self-deluded, those on Wall Street or among the political elite, those who entertain and inform us, those who lack the capacity to question the lusts that will ensure our self-annihilation, who are held up as exemplars of intelligence, success and progress. The World Health Organization calculates that one in four people in the United States suffers from chronic anxiety, a mood disorder or depression—which seems to me to be a normal reaction to our march toward collective suicide. Welcome to the asylum...

Earth to Ben Bernanke
by Paul Krugman
The New York Times Magazine
April 24, 2012

The Bernanke Conundrum — the divergence between what Professor Bernanke advocated and what Chairman Bernanke has actually done — can be reconciled in a few possible ways. Maybe Professor Bernanke was wrong, and there’s nothing more a policy maker in this situation can do. Maybe politics are the impediment, and Chairman Bernanke has been forced to hide his inner professor. Or maybe the onetime academic has been assimilated by the Fed Borg and turned into a conventional central banker. Whichever account you prefer, however, the fact is that the Fed isn’t doing the job many economists expected it to do, and a result is mass suffering for American workers...

An ugly foreclosure story, starring Bank of America
by Gale Holland
Los Angeles Times
April 13, 2012

Dirma Rodriguez had five minutes to gather her things and vacate the West Adams house she and her severely disabled daughter had lived in for more than 25 years.

As a property manager changed the locks, Rodriguez fluttered back and forth from the yard — where a pile of stuff lay by the kitchen stove — to her car, where her daughter, Ingrid Ortiz, sat screaming and crying.

How Rodriguez and Ortiz ended up in this predicament is a long, messy story that resounds with a misery all too common in this age of foreclosure.

Rodriguez took out a loan to retrofit her house for her special-needs daughter. After she fell behind on her payments, the Bank of America lowered her monthly obligation, but then sold the house at a foreclosure auction last September. The new owner, a house flipper from El Segundo called West Ridge Rentals, moved to evict the family...

Occupy's Plans to Take Down Bank of America
by Allison Kilkenny
The Nation Magazine
April 9, 2012

As part of a “Spring Preview” back in late February, about fifty protesters stood in the rain during a teach-in at Bryant Park to hear Rolling Stone’s Matt Taibbi explain that if enough people pulled their money from Bank of America and stock prices dipped for more than a month, the bank would be “kaput.” (In classic Taibbi fashion, he also compared BoA selling bad mortgages to a dealer selling oregano as weed)...

Americans brace for next foreclosure wave
by Nick Carey
Reuters
April 4, 2012

Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.

But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

"We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010," said Mark Seifert, executive director of Empowering & Strengthening Ohio's People (ESOP), a counseling group with 10 offices in Ohio.

"Last year was an anomaly, and not in a good way," he said.

In 2011, the "robo-signing" scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

Five major banks eventually struck that settlement with 49 U.S. states in February. Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur...

If You Took the Greed Out of Wall Street, All You’d Have Left Is Pavement: Why Greg Smith’s Critique is Way Too Narrow
by Robert Reich on his blog
March 16, 2012

Greg Smith, a Goldman Sachs vice president, resigned his post Wednesday with a stinging public rebuke of the firm on the oped page of the New York Times — accusing it of no longer putting its clients before its own pecuniary goals.

But if Mr. Smith believes his experience at Goldman is something new, he doesn’t know history. In 1928, Goldman Sachs and Company created the Goldman Sachs Trading Corporation, which promptly went on a speculative binge, luring innocent investors along the way. In the Great Crash of 1929, Goldman’s investors lost their shirts but Goldman kept its hefty fees.

If Mr. Smith believes such disregard of investors is unique to Goldman, he doesn’t know the rest of Wall Street. In the late 1920s, National City Bank, which eventually would become Citigroup, repackaged bad Latin American debt as new securities which it then sold to investors no less gullible than Goldman Sachs’s. After the Great Crash of 1929, National City’s top executives helped themselves to the bank’s remaining assets as interest-free loans while their investors and depositors were left with pieces of paper worth a tiny fraction of what they paid for them.

The problem isn’t excessive greed. If you took the greed out of Wall Street all you’d have left is pavement. The problem is endemic abuse of power and trust. When bubbles are forming, all but the most sophisticated investors can be easily duped into thinking they’ll get rich by putting their money into the hands of brand-named investment bankers...

As a result of these union-busting laws, unions have ceased to function and workers earn less. The average worker in a right-to-work state earns anywhere from $1,500 to $5,000 less per year than workers in other states. They receive less in health benefits, less in pension benefits and less protection from unsafe conditions or unfair dismissal...

The war on labor does not end with Right to Work. Having decimated labor in the private sector (as of January 2011, according to Bureau of Labor Statistics, the number of union workers in the private sector fell to a 100-plus-year low of 6.9 percent), anti-labor forces have taken aim at the public sector. The tactic of choice against police, firefighters, teachers and other government employees is attacking the right to collective bargaining and binding arbitration.

To fully comprehend this attack, you need to understand that government employees are often prohibited by law from striking to achieve fair treatment in negotiations with their employers. In those cases where it is legal to strike, conscientious employees are loath to do so because of the harm it would do to students and communities. Binding arbitration by an impartial body is an alternative to the strike.

When you take away the right to fair arbitration, you leave workers at the mercy of their employers and you cut the union off at its knees...

We are all in this fight together. If we wish to push back the most powerful force the world has ever encountered, corporate greed, we must unite against the tide. The right to organize the workplace, the right to unionize, must be fought for and defended.

We are under siege. We are the victims of a devastating fifty-year war against workers that is relentless and without mercy. The corporations have taken control of our government with unlimited sponsorship of elected officials. They have moved our industries to China, Malaysia, Indonesia and elsewhere, without any concern for the welfare of our nation or its people. They have outsourced our technology service, drafting and infrastructure planning jobs to India. They have reduced their share of tax responsibility to a minimum with offshore accounts and favorable legislation, forcing a beleaguered workforce to pick up the tab. And they have done all this with a sense of entitlement.

We are just beginning to fight back. We are beginning to understand that if we speak out in one voice, the 99 against the one, our politicians will begin to listen. We are beginning to understand that fighting for labor rights overseas will bring the jobs that are rightfully ours back home...

The corporations that have taken control of our government will cry foul. They will accuse us of class warfare to which we will reply: yes, but now we are fighting back.

Modern Republicans are very, very conservative; you might even (if you were Mitt Romney) say, severely conservative. Political scientists who use Congressional votes to measure such things find that the current G.O.P. majority is the most conservative since 1879, which is as far back as their estimates go...

Many readers of The Times were, therefore, surprised to learn, from an excellent article published last weekend, that the regions of America most hooked on Mr. Santorum's narcotic — the regions in which government programs account for the largest share of personal income — are precisely the regions electing those severe conservatives. Wasn't Red America supposed to be the land of traditional values, where people don't eat Thai food and don't rely on handouts?...

Now, there's no mystery about red-state reliance on government programs. These states are relatively poor, which means both that people have fewer sources of income other than safety-net programs and that more of them qualify for "means-tested" programs such as Medicaid...

But why do regions that rely on the safety net elect politicians who want to tear it down? I've seen three main explanations...

Lately inequality has re-entered the national conversation. Occupy Wall Street gave the issue visibility, while the Congressional Budget Office supplied hard data on the widening income gap. And the myth of a classless society has been exposed: Among rich countries, America stands out as the place where economic and social status is most likely to be inherited.

So you knew what was going to happen next. Suddenly, conservatives are telling us that it's not really about money; it's about morals. Never mind wage stagnation and all that, the real problem is the collapse of working-class family values, which is somehow the fault of liberals.

But is it really all about morals? No, it's mainly about money...

In a better world — specifically, a world with a better policy elite — a good jobs report would be cause for unalloyed celebration. In the world we actually inhabit, however, every silver lining comes with a cloud. Friday's report was, in fact, much better than expected, and has made many people, myself included, more optimistic. But there's a real danger that this optimism will be self-defeating, because it will encourage and empower the purge-and-liquidate crowd...

And the inflation hawks at the Fed and elsewhere seem undeterred either by the way the predicted explosion of inflation keeps not happening, or by the disastrous results last April when the European Central Bank actually did raise rates, helping to set off the current European crisis.

But there's also a sort of freestanding opposition to low interest rates, a sense that there's something wrong with cheap money and easy credit even in a desperately weak economy. I think of this as the urge to purge, after Andrew Mellon, Herbert Hoover's Treasury secretary, who urged him to let liquidation run its course, to "purge the rottenness" that he believed afflicted America.

And every time we get a bit of good news, the purge-and-liquidate types pop up, saying that it's time to stop focusing on job creation.

Sure enough, no sooner were the new numbers out than James Bullard, the president of the St. Louis Fed, declared that the new numbers make further Fed action to promote growth unnecessary. And the sad truth is that the good jobs numbers have definitely made it less likely that the Fed will take the expansionary action it should.

So here's what needs to be said about the latest numbers: yes, we're doing a bit better, but no, things are not O.K. — not remotely O.K. This is still a terrible economy, and policy makers should be doing much more than they are to make it better.

The supercommittee was a superdud — and we should be glad. Nonetheless, at some point we'll have to rein in budget deficits. And when we do, here's a thought: How about making increased revenue an important part of the deal?...

So raising taxes on the very rich could make a serious contribution to deficit reduction. Don't believe anyone who claims otherwise...

Now, the tax ideas I've just mentioned wouldn't be enough, by themselves, to fix our deficit. But the same is true of proposals for spending cuts. The point I'm making here isn't that taxes are all we need; it is that they could and should be a significant part of the solution.

"We are the 99 percent" is a great slogan. It correctly defines the issue as being the middle class versus the elite (as opposed to the middle class versus the poor). And it also gets past the common but wrong establishment notion that rising inequality is mainly about the well educated doing better than the less educated; the big winners in this new Gilded Age have been a handful of very wealthy people, not college graduates in general.

If anything, however, the 99 percent slogan aims too low. A large fraction of the top 1 percent's gains have actually gone to an even smaller group, the top 0.1 percent - the richest one-thousandth of the population.

And while Democrats, by and large, want that super-elite to make at least some contribution to long-term deficit reduction, Republicans want to cut the super-elite's taxes even as they slash Social Security, Medicare and Medicaid in the name of fiscal discipline.

Before I get to those policy disputes, here are a few numbers...

And these people — the people who bullied Europe into adopting a common currency, the people who are bullying both Europe and the United States into austerity — aren't technocrats. They are, instead, deeply impractical romantics.

They are, to be sure, a peculiarly boring breed of romantic, speaking in turgid prose rather than poetry. And the things they demand on behalf of their romantic visions are often cruel, involving huge sacrifices from ordinary workers and families. But the fact remains that those visions are driven by dreams about the way things should be rather than by a cool assessment of the way things really are.

And to save the world economy we must topple these dangerous romantics from their pedestals...

The truth is that Europe's march toward a common currency was, from the beginning, a dubious project on any objective economic analysis. The continent's economies were too disparate to function smoothly with one-size-fits-all monetary policy, too likely to experience "asymmetric shocks" in which some countries slumped while others boomed. And unlike U.S. states, European countries weren't part of a single nation with a unified budget and a labor market tied together by a common language.

So why did those "technocrats" push so hard for the euro, disregarding many warnings from economists? Partly it was the dream of European unification, which the Continent's elite found so alluring that its members waved away practical objections. And partly it was a leap of economic faith, the hope — driven by the will to believe, despite vast evidence to the contrary — that everything would work out as long as nations practiced the Victorian virtues of price stability and fiscal prudence...

Inequality is back in the news, largely thanks to Occupy Wall Street, but with an assist from the Congressional Budget Office. And you know what that means: It's time to roll out the obfuscators!

 

Bombs, Bridges and Jobs
by Paul Krugman
The New York Times
October 30, 2011

Right now the weaponized Keynesians are out in full force — which makes this a good time to see what's really going on in debates over economic policy.

What's bringing out the military big spenders is the approaching deadline for the so-called supercommittee to agree on a plan for deficit reduction. If no agreement is reached, this failure is supposed to trigger cuts in the defense budget.

Faced with this prospect, Republicans — who normally insist that the government can't create jobs, and who have argued that lower, not higher, federal spending is the key to recovery — have rushed to oppose any cuts in military spending. Why? Because, they say, such cuts would destroy jobs...

But there are also darker motives behind weaponized Keynesianism.

For one thing, to admit that public spending on useful projects can create jobs is to admit that such spending can in fact do good, that sometimes government is the solution, not the problem. Fear that voters might reach the same conclusion is, I'd argue, the main reason the right has always seen Keynesian economics as a leftist doctrine, when it's actually nothing of the sort. However, spending on useless or, even better, destructive projects doesn't present conservatives with the same problem...

So I welcome the sudden upsurge in weaponized Keynesianism, which is revealing the reality behind our political debates. At a fundamental level, the opponents of any serious job-creation program know perfectly well that such a program would probably work, for the same reason that defense cuts would raise unemployment. But they don't want voters to know what they know, because that would hurt their larger agenda — keeping regulation and taxes on the wealthy at bay.

Has market turmoil left you feeling afraid? Well, it should. Clearly, the economic crisis that began in 2008 is by no means over.

But there's another emotion you should feel: anger. For what we're seeing now is what happens when influential people exploit a crisis rather than try to solve it.

Think about what's happening right now. We have a crisis in which the right is making insane demands, while the president and Democrats in Congress are bending over backward to be accommodating - offering plans that are all spending cuts and no taxes, plans that are far to the right of public opinion.

So what do most news reports say? They portray it as a situation in which both sides are equally partisan, equally intransigent - because news reports always do that. And we have influential pundits calling out for a new centrist party, a new centrist president, to get us away from the evils of partisanship...

If you were shocked by Friday's job report, if you thought we were doing well and were taken aback by the bad news, you haven't been paying attention. The fact is, the United States economy has been stuck in a rut for a year and a half.

Yet a destructive passivity has overtaken our discourse. Turn on your TV and you'll see some self-satisfied pundit declaring that nothing much can be done about the economy's short-run problems (reminder: this "short run" is now in its fourth year), that we should focus on the long run instead.

This gets things exactly wrong. The truth is that creating jobs in a depressed economy is something government could and should be doing. Yes, there are huge political obstacles to action - notably, the fact that the House is controlled by a party that benefits from the economy's weakness. But political gridlock should not be conflated with economic reality.

Our failure to create jobs is a choice, not a necessity - a choice rationalized by an ever-shifting set of excuses.