All Life Is Problem Solving

Recently, my friend Marshall Auerback posted an article at New Deal 2.0 about Obama’s coming “teachable moment” when the Republicans try to wring concessions out of the Democrats by refusing to raise the ceiling on the national debt. The post stimulated a lot of good discussion about alternatives Obama might have to shutting down the Government in response.

In this post, I want to raise the question again about what what might happen if the Republicans refuse to raise the debt ceiling, preventing the Federal Government from issuing any more debt, because I think we can get some interesting discussion started here, and perhaps might come up with something that would short-circuit the coming Congress. Here are some considerations from the discussion on Marshall’s post that may prompt that discussion. [Read more →]

This is the first of a number of posts on the Catfood Commission’s latest travesty: the Co-Chair’s Proposal. The proposal begins with statements about “Our Guiding Principles and Values.” I’ll analyze the first page in this statement of principles in this post.

1.We have a patriotic duty to come together on a plan that will make America better off tomorrow than it is today

— America cannot be great if we go broke. Our economy will not grow and our country will not be able to compete without a plan to get this crushing debt burden off our back.

— Throughout our history, Americans have always been willing to sacrifice to make our nation stronger over the long haul. That’s the promise of America: to give our children and grandchildren a better life.

— American families have spent the past 2 years making tough choices in their own lives. They expect us to do the same. The American people are counting on us to put politics aside, pull together not pull apart, and agree on a plan to live within our means and make America strong for the long haul.

[Read more →]

Cenk Uygur provides us with this very much to the point post-election rant.

I couldn’t agree more. But the question is the messaging on it. People who want to change things, whether Dems or otherwise, need to frame things as solutions to problems, while only voting for solutions that will really work. For example, the main concern of the public is “jobs.” At this juncture jobs can only be created by Government spending, and will be most efficiently created by Federal Job programs, payroll tax cuts, revenue sharing for the States, reductions in the standard work week, and increases in the mini-wage. The private sector will keep sitting on its trillions until there’s demand out there, and the Federal Government is the only actor that can create demand in the private sector in the short run. When demand is great enough, the private sector will begin to participate, but only when they know that sufficient demand is there to reward investments with sales.

Further, Government job creating efforts must be proposed without accepting counter-balancing cuts in Federal spending, or tax increases (other than expiration of the Bush tax cuts for the wealthy, a matter of social justice). This is because Government deficits create non-Government sector financial assets dollar-for-dollar and therefore increase aggregate demand. Government surpluses destroy such financial assets dollar-for dollar and reduce aggregate demand. And Government spending paid for by counter-balancing cuts neither creates nor destroys such assets, other things being equal. Since there is too little demand out there now because consumers have too little in financial assets, job creation efforts that “are paid for” by spending cuts or tax increases, won’t address the problem of creating additional aggregate demand, and therefore must be fought by Democrats and “progressives,” who must not compromise on this point, if they want to create more net jobs.

I could say a lot more, but I want this short. So I’ll end with the idea that Democrats and progressives have to avoid all compromises producing “solutions” that pull in opposite directions. For example, they shouldn’t do what they did in health care reform in trading increased coverage for a juicy bailout for the insurance companies. Instead, they should have gone in strong for Medicare for All and then traded votes for an incremental approach to getting more age ranges covered. That kind of incremental approach is OK, because at least they get a solution to the part of the problem their legislation addresses.

Will the Democrats be able to pass anything like the above with a Republican House? Probably not, unless a sudden mass movement scares the crap out of the Republican establishment in the House. But they can lay down markers for what they will do in 2012, and develop a concrete mandate, promising that there will be no compromise on it.

If a third party isn’t ready to go by then, they may still win in 2012, but only if people come to hate the GOP as much as they probably will, and if they themselves don’t make the mistake of supporting the President’s Catfood Commission recommendations or make other compromises involving giveaways to Wall Street. If they do win, they will know it is because people approve of their mandate, in addition, to hating the Republicans.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

In my last post, I reviewed Part 1 of Bill Black and Randy Wray’s series on “Foreclosing the Foreclosure Frauds.” In Part 2, Bill and Randy answer three typical objections to their plan:

— “. . . while there were some bad apple lenders, much of the fraud was committed by borrowers. . . “ and so their proposal would reward fraudulent borrowers, while punishing duped banks;

— “. . . . the biggest banks are too important to take into receivership” (“too big to fail”);

— “It isn’t possible to resolve a ‘too big to fail’ institution.”

They deal with the area of “borrower fraud” first and say the following which I’ve reformatted slightly for emphasis: [Read more →]

The momentum building against the continued cover-up of widespread foreclosure fraud by the big banks and their associated agents is a wonder to behold. The progressive blogosphere is afire with posts about the frauds and calls for justice. Just today, Yves Smith at Naked Capitalism had three recent items on the subject. Professor L. Randall Wray offered a great post at Credit Writedowns. FDL has offered numerous posts on the subject over a period of months and has a page of links to these articles. Coverage at HuffPo has been fulsome, including a recent post by R. J. Eskow that offers a “home loan moral hazard scorcecard”.

Now, partly in reply to discussions at FDL, the most comprehensive and important piece I’ve seen yet was written by Professors William K. Black and L. Randall Wray and posted at HuffPo. It is a two-part piece. I’ll comment on Part 1 here, and Part 2 in a future post. The series “Foreclose the Foreclosure Frauds,” is a call for justice, an outline of steps for getting it, and (in Part 2) a consideration of objections to their prescriptions. Here are some quotes from Part 1, and comments on each. [Read more →]

Remember Bill Clinton lying under oath about his relations with Monica Lewinsky?

Which is worse, the lie Bill Clinton told under oath, or the lie told by a single robo-signer on a single occasion when she/he signed a foreclosure affidavit perjuriously stating that they had reviewed and verified the information in the foreclosure documents?

Does it get any better when many millions of these perjuries have been committed? [Read more →]

Ezra Klein did a piece yesterday offering the conventional deficit dove position on deficits and debt. Here’s a commentary on it.

Gallup’s survey of voter preferences for closing the entitlement gap is incomplete It suggests the options on entitlements are like a second-grade arithmetic problem: You can either add stuff (tax increases) or subtract stuff (benefit cuts). What’s missing is the option you learn about in high school: growth.

[Read more →]

Today I was planning on a post about Quantitative Easing (QE), because it seemed to me that it would never work. However, today, Randy Wray beat me to it with another great post, this time at ND20, reviewing the whole situation in detail, placing it in political context, and explaining why it’s very unlikely that it will allow the economy to recover much more than it has already. Here are some key quotes from Randy’s piece.

. . . The Fed is in a Catch 22: Interest rate policy will not spur borrowing until economic recovery is underway, but recovery will not begin until spending picks up. Only jobs and income will stimulate spending, but the Fed cannot do anything in those areas.

This is the basic problem. Fooling with interest rates to increase business borrowing just won’t stimulate much spending in the present situation of the American economy. [Read more →]

[Author’s note: This has been re-posted by Joe Firestone (a.k.a. letsgetitdone) on behalf of author Warren Mosler with his express permission. Warren Mosler is currently the Independent Party candidate for the US Senate in CT]

By

Warren Mosler

The latest mortgage foreclosure mess is just another financial crisis.

It’s not a real economic crisis- no houses have been actually destroyed- no fire, hurricane, or earthquake damage, etc.

So the responses aren’t about bulldozers, hammers, concrete pouring, etc.

The question is whether this financial discovery/event spills over into the real economy. [Read more →]

On Friday, the Government reported its 2010 Fiscal Year results. Here are some fragments from a “news” article in WaPo by Vincent Del Giudice.

The U.S. government posted its second straight annual budget deficit in excess of $1 trillion as lingering unemployment constrained tax revenue.

The shortfall totaled $1.294 trillion in the fiscal year ended Sept. 30, second only to the $1.416 trillion deficit in 2009, the Treasury Department said today in Washington. . . .

. . . The national debt totals more than $13 trillion, exceeding the size of the economy, unadjusted for inflation. . . .

In September, the budget shortfall was $34.5 billion, the second straight year of uninterrupted monthly deficits, compared with $45.2 billion in September 2009, according to the Treasury. . . . . [Read more →]