All Life Is Problem Solving

The best short characterization of the current banking/foreclosure mess that now threatens us with another episode of “shock doctrine” capitalism is Randy Wray’s. Here it is:

We have long known that lender fraud was rampant during the real estate boom. The FBI began warning of an “epidemic” of mortgage fraud as early as 2004. We know that mortgage originators invented “low doc” and “no doc” loans, encouraged borrowers to take out “liar loans”, and promoted “NINJA loans” (no income, no job, no assets, no problem!). All of these schemes were fraudulent from the get-go. Property appraisers were involved, paid to overvalue real estate. That is fraud. The securitizers packaged trash into bundles that ratings agencies blessed with the triple A seal of approval. By their own admission, raters worked with securitizers to provide the rating desired, never looking at the loan tapes to see what they were rating. Fraud. Venerable investment banks like Goldman Sachs packaged the trashiest securities into collateralized debt obligations at the behest of hedge fund managers–who were allowed to choose the most toxic of the toxic waste—then sold the CDOs on to their own customers and allowed the hedge funds to bet against them. More fraud. [Read more →]

Chris Matthews’s Hardball featured a segment where Willie Brown, Joan Walsh, and Chris commented on the Brown/Whitman and Blumenthal/McMahon contests for the US Senate in CA and CT. After watching an exchange between the two CT candidates. Chris shook his head in wonderment and in the midst of some contemptuous chuckles said: [Read more →]

Mike Konczal is writing a terrific series on the foreclosure crisis. The other day I read Parts 1-3 of it at New Deal 2.0. I recommend it as providing a very clear explanation with some diagrams about what’s behind the crisis, and a discussion of some possible ways in which could represent big trouble for the broader economy. The Administration is responding to the crisis with noises about its concerns that the big banks might again be damaged and also with its hope that the banks can clear up the foreclosure paperwork problems in a fairly brief time. [Read more →]

Last Sunday, my son asked me what I thought about the WaPo article “Treasury Secretary Timothy Geithner tackles five myths about TARP.” Here’s my reply.

There’s a lot of truth to the specifics, but his overall evaluation is way off because he looks at it by cherry-picking specific points, and also restricting his evaluation to the bank situation alone, and assuming that the proper goal was to save the big banks at low cost rather than to save the economy. So here are things the Administration and Geithner could have done if they had ended TARP and taken a different course. [Read more →]

A little while ago I did a piece on tweeting the fear card, and the attempts of certain supporters of the Democrats in this year’s elections to persuade dissatisfied and angry progressives that severe damage will be done to the country if the Republicans take over the House, the implication being that severe damage will not also be done if the Democrats retain control of the House. As the election has approached the fear card is being supplemented by the guilt card. [Read more →]

Nobel prize winner Joe Stieglitz recently called for a second stimulus to reduce unemployment and get the economy working well again. But the Administration seems uninterested in pushing the idea or making it an issue in the election, because it has been unsuccessful in setting the necessary frame for persuading the public that its first inadequate stimulus was only a political compromise that has done some good, but left much more yet to do. Yet we badly need that second stimulus, and if the Democrats could get their act together, get people back to work this month, and were willing to get rid of the filibuster in the Senate, we could have it quickly, and they probably could even avoid catastrophic losses in November. [Read more →]

The AP recently released poll results on how people feel about the health care reform bill. Commenting on it, Kevin Drum says:

Atrios links to a Dave Dayen post that links to a report that says, “A new AP poll finds that Americans who think the law should have done more outnumber those who think the government should stay out of health care by 2-to-1.” And the poll does say that. However, it doesn’t say what “done more” means, and the actual numbers suggest that a more liberal law wouldn’t have been any more popular than what we got. Here are the basic results from the AP poll: 30% favor the healthcare reform law, 40% oppose, and 30% aren’t sure. Then they asked the 70% who were opposers and not surers a second question:

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We Americans have a problem. We’re supposed to be a democracy responsive to the people. But polls show that policies favored by heavy majorities of Americans don’t get legislated by either or both parties in Congress. Instead, bills are passed that a majority of people either don’t care about, or view as a betrayal of their interests. People believe this is because both major parties are dominated by special interests who provide big money contributions to run their campaigns. In addition to these financial advantages, the major parties have gained control of the electoral system by structuring the rules of the game so that third parties cannot grow and threaten their domination. How can we get around this closed system, and either make the major parties responsive to us, or see to it that third parties can be successful? [Read more →]

It’s been nearly 35 years since we’ve had a “tax and spend” political party. During the 1970s, the Democrats gave up fighting the Republicans about the “tax and spend” label, and the Carter Administration tried to escape from that charge by making very serious attempts to balance the budget. During the 1980s, more and more Democrats emphasized their concern for reducing deficits and balancing budgets as a way of distinguishing themselves from the Reagan Administration’s unprecedented peacetime deficits. This didn’t work for them during Reagan’s time, but they finally were able to use the balanced budget old-time religion game to get George Bush to violate his no new taxes pledge, which both contributed to the Bush recession and, as a further consequence, was a big reason why Bill Clinton was elected.

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Earlier this month, Thomas Geoghegan wrote a piece for The Nation telling the Democrats the ten things they could do to really get the base excited, and at the same time do good things for the country. Here’s his list.

1. Raise Social Security to 50 percent of working income.

2. Let’s extend Medicare to people 55 to 65.

3. Make it a civil right to join, or not to join, a labor union.

4. Put in a usury cap of 16 percent.

5. Set up small government banks like the German Sparkasse.

6. Give everyone the right to six days of vacation — six consecutive paid working days.

7. Let employees sue corporate officers for breach of fiduciary duty to the corporation.

8. Pass a College Bill of Rights.

9. End the filibuster.

10. Get the country out of debt.

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