Before we proceed into what, IMHO, is an outstanding series of comments from the folks over at the Roosevelt Institute, from Thursday, including Netroots Nation discussion leader Mike Konczal, I wanted to revisit my post from Wednesday for a moment, "You Thought Last Night Was Bad? Just Wait Another 4 Hours."
In that post, I highlighted Joseph Stiglitz' criticisms of Fed Chair Ben Bernanke's QE2 plans, wherein Stiglitz stated: "We need stimulus, not quantitative easing." Then I said:
But, he's a progressive Democrat, and we have a Republican (reappointed to his post by a Democratic administration) controlling the Federal Reserve, spinning the latest stealthy welfare-for-the-rich bailout as something quite different than what it is: "Fed to Launch Bold, Risky Effort to Boost Economy."
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Then I got a little snarky:
$500 billion here. Another $500 billion there (possibly, in another six months), and pretty soon you're talking about real money. Heh. No need for Wall Street to subject itself to the scrutiny of a lame-duck session on Capitol Hill; no need to tell the truth to an already-ignorant, deliberately misdirected public; just collect (print) 500 billion dollars. Do not go directly to jail. Do not pass Go.
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And, then I went back to Stiglitz:
Then again, even Krugman and Bonddad don't think what Bernanke's doing via QE2 will amount to much.
(NOTE: I haven't made mention of Shahien Nasiripour's coverage of this story, over at HuffPo, but he's doing some of his best work right now. And, here's a link to a really good example of that: "Federal Reserve Rains Money On Corporate America -- But Main Street Left High And Dry.")
$600 billion or a trillion bucks for what? A big cup of...nothing? More cash for banks to sit on at the Fed as they earn another $30 to $40 billion a year in tax-free interest from taxpayers; or for them to invest outside of the country? (Where's the "velocity?") Juicing the interest rate on gov't paper by, perhaps three-quarters of a percentage point, at best, and then only short-term? Pumping up the stock market into yet an even bigger bubble to induce a false sense of security/confidence among the population?
Been there, done that.
At its worst, it pisses off the international community; and it is, simply, even more welfare for the rich. At its best, it's of nominally fleeting value to society.
A trillion dollars, lent directly to Main Street (something the Fed's been empowered to do, all along, but has opted to ignore), however, as Stiglitz covers it, would jumpstart a hell of a lot of hiring and small business expansion. Instead, as Krugman observed on Wednesday, the powers that be have grossly and erroneously--once again--determined that fiscal policy is dead:
The Strange Death of Fiscal Policy
Paul Krugman
NY Times Blog
November 3, 2010, 1:45 pm
One clear result of the midterms is that we won’t have anything like a further round of stimulus. And this, in turn, means that the narrative all the Very Serious People will tell is that fiscal policy was tried, it failed, and that’s that.
But the real facts don’t at all support the conventional wisdom.
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So, it’s an amazing thing: Obama and company have managed to convince people that big government failed, without actually delivering big government.
Back to late Thursday...
(Diarist's Note: Naked Capitalism Publisher Yves Smith has provided written authorization to diarist to reprint her blog's posts in their entirety for the benefit of the DKos community.)
'Rules of Our Society Should Not Be Bought and Sold': Roosevelt Election Roundup
Naked Capitalism
November 4, 2010 5:00PM
Round-up of verdicts on the US elections by the New Deal 2.0 team, assembled by Lynn Parramore, Editor of New Deal 2.0 and Media Fellow at the Roosevelt Institute
In the wake of a Democratic loss not seen in the House since 1938, upended Senate seats, and Republican gubernatorial wins, Roosevelt Institute Fellows weigh in. Was the vote a referendum on Democrats? What will it mean moving forward?
"The American people are voting against the political system. They are given the choice between the marketed vision of false hope and the vision of everyman financed by those who are attempting to take away vital services. Anger at the financial bailouts is understandable and a vote to cut off government from using our future tax burden to fortify the powerful is also quite sensible. The problem is that in the era of money politics, no coalition from either party can make good on the mirage of their marketed vision.
That both Alan Grayson and Russ Feingold were defeated after being ardent critics of the bailouts and the industry friendly financial regulatory reform is a clear warning that the money system can defeat the politician who represents the people’s interest against powerful vested interests.
All of this points to the fundamental need for reform of government incentives in order to restore the power of votes relative to the power of money. And to the fact that reform is the precursor to limiting the domination of our state by concentrated money interests, both corporate and by wealthy individuals. The rules of our society should not be bought and sold."
- Robert Johnson, Roosevelt Institute Senior Fellow and Director of the Project on Global Finance; Executive Director of the Institute for New Economic Thinking
"High unemployment and a housing market that’s right out of Twenty Thousand Leagues Under the Sea would wreck any regime’s reelection prospects. This was no communication failure: The administration had nothing to offer ordinary people. Facing a wave of secret money, you can’t win elections by just saving banks."
- Tom Ferguson, Roosevelt Institute Senior Fellow; Professor of Political Science at the University of Massachusetts, Boston
"In my view, President Obama had one key mission: to prove the value of government. He and his defenders argue that he has achieved much. In particular, they cite health care reform, financial re-regulation, the Recovery Act of 2009, and some even claim he has a workable strategy in Afghanistan. All these were agenda items that needed addressing. Obama has been able to convince too few Americans that any of them were adequately addressed. In fact, they were not, and he never seemed to come to terms with that central fact. To the contrary, he seemed to bury his head in the sand. His claim was that we got so much done but no one really knew about it. This was not bad public relations. It was not failure of government. It was inadequate policy and the failure to own up to it. Obama said a few times he got seventy percent of his agenda done. He got something done, sure, but in no case did it solve the pressing problems they were addressing. This is a man who willfully has averted his eyes from reality, I fear, and the public knew it. And the stunning electoral losses — made a little more tolerable by the constant lowering of expectations — don’t look like they will shake him up. Equanimity is his constant goal, even in the face of such adversity."
- Jeff Madrick, Roosevelt Institute Senior Fellow and author of The Case for Big Government
"There was no mandate for the repeal of health care in this election, with Democrats who voted against the bill and for the bill equally joined in defeat, but that won’t stop Republicans for claiming one. The Republicans will do all they can to terminate the biggest expansion of the social compact in decades, understanding that if health care reform is implemented, it will prove to Americans that government can actually work for them."
- Richard Kirsch, Roosevelt Institute Senior Fellow and formerly National Campaign Manager of Health Care for America Now
"Barack Obama did not do what it took to pull the economy out of the doldrums. This is true for the fiscal stimulus, which was too small, too preoccupied with returning to a surplus as fast as possible, and contained too much lag. His banking bailout policies continued the Bush/Paulson approach and effectively reinforced the notion of government as an instrument of predatory capitalism, rather than an entity mobilizing resources for a broader public purpose. Obama didn’t give us ‘change we could believe in.’ He instead used trillions of dollars in financial guarantees to sustain Wall Street (much more money than was spent on the stimulus) and consequently presided over one of the most regressive wealth transfers in American history. At a time when most Americans were experiencing stagnant or absolute declines in total wages, and Wall Street Robber Barons paid themselves even higher bonuses than before, the President was totally insensitive. He appeared to take pains to put down or ignore the aspirations of every single part of his base. And he wonders why there was an ‘enthusiasm gap.’"
- Marshall Auerback, Roosevelt Institute Senior Fellow
"The most striking thing about the post-election landscape is the utter route of centrists Democrats. In the aftermath, as Chris Bowers notes, the Progressive Caucus is larger than the Blue Dog and the New Dems combined. Analysts will continue to go through the numbers, but right now there’s nothing to suggest that ‘liberal overreach’ or a lack of centrist views was a factor. The truth is much worse: the ugly process of appeasing and buying off centrist Democrats on financial reform and health care turned what should have been landmark generational reform into a bitter, ugly view of corporate power and sleazy influence over our political system, the Senate and the political party that is supposed to defend the interests of working people."
- Mike Konczal, Roosevelt Institute Fellow
"Americans want bold ideas and a clear vision, not back-room deals and bank-centric policies. Until Democrats can offer these to voters, they will not succeed. For the next two years, those who would stand in the way of investing in jobs, schools, roads, bridges, and rebuilding the middle class will present even more obstacles to a prosperous future. But progressives are energized and see that the time for backing down and letting billionaires run the country is over. The fight for the future of ordinary Americans is on. Get the gloves off."
- Lynn Parramore, Editor of New Deal 2.0 and Media Fellow at the Roosevelt Institute
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But, the truth is, fiscal policy only dies (as an option) if Democrats allow that to (continue to) happen.
And, here's Krugman in Friday's NY Times reminding us of just that:
The Focus Hocus-Pocus
By PAUL KRUGMAN
NY Times Op-Ed
November 5, 2010
Democrats, declared Evan Bayh in an Op-Ed article on Wednesday in The Times, "overreached by focusing on health care rather than job creation during a severe recession." Many others have been saying the same thing: the notion that the Obama administration erred by not focusing on the economy is hardening into conventional wisdom.
But I have no idea what, if anything, people mean when they say that. The whole focus on "focus" is, as I see it, an act of intellectual cowardice...
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...Mr. Obama’s problem wasn’t lack of focus; it was lack of audacity...
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Of course, there’s a subtext to the whole line that health reform was a mistake: namely, that Democrats should stop acting like Democrats and go back to being Republicans-lite. Parse what people like Mr. Bayh are saying, and it amounts to demanding that Mr. Obama spend the next two years cringing and admitting that conservatives were right.
There is an alternative: Mr. Obama can take a stand.
For one thing, he still has the ability to engineer significant relief to homeowners, one area where his administration completely dropped the ball during its first two years. Beyond that, Plan B is still available. He can propose real measures to create jobs and aid the unemployed and put Republicans on the spot for standing in the way of the help Americans need.
Would taking such a stand be politically risky? Yes, of course. But Mr. Obama’s economic policy ended up being a political disaster precisely because he tried to play it safe. It’s time for him to try something different.
WARNING: REALITY IMMEDIATELY AHEAD!
AT BEST, THE UNEMPLOYMENT SITUATION IS GOING SIDEWAYS/NOWHERE FAST...
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In about seven hours, the Bureau of Labor Statistics will issue its October 2010 Employment Situation Report, and the consensus is for a report that demonstrates -- once again, that current job "growth" realities aren't even keeping pace with the birth-death rate of business formation/destruction in the U.S., let alone the growth of the population -- virtually insignificant, ongoing job gains.
1,200,000 AMERICANS WILL LOSE THEIR UNEMPLOYMENT BENEFITS THIS MONTH...
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Meanwhile, roughly 1.2 million Americans are scheduled to lose their unemployment benefits, this month, alone. Given a few more weeks, hundreds of thousands within that group will just become part of "the disappeared," due to our government no longer classifying them as "jobless," at all. (I guess that's one way to "resolve" the "unemployment problem.")
ANOTHER $500,000,000,000 FOR FANNIE AND FREDDIE TO GET THEIR GROOVE BACK???
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Standard & Poor's has just informed us, over the past 24 hours, that "resolving and relaunching" Fannie Mae and Freddie Mac will cost taxpayers another half-trillion dollars!
BANK OF AMERICA IS...STILL...INSOLVENT...
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Bloomberg columnist Jonathan Weil just reminded us again, on Thursday, that our country's largest bank is still very much making a beeline towards comprehensive insolvency: "Bank of America Edges Closer to Tipping Point: Jonathan Weil." But, the one thing they've got plenty of is hubris (hmmm...perhaps they can do a Repo 105 deal with hubris as their collateral): "BofA rejects calls to buy back mortgages."
NEW TAXPAYER MONEY'S STILL BEING SPENT ON WALL STREET TO PROP UP FAILED INSTITUTIONS...
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And, while some would have us believe the absurd meme that TARP turned a profit, more stealthy taxpayer money for AIG and their ilk is the real truth. On top of that, many others are telling us that the endgame for Bernanke's quantitative easing redux is merely another stealthy bailout of Wall Street, as well. (See: HERE, HERE, and HERE.)
More than likely, it will be announced in coming days that there will be ongoing tax cuts for the rich for the next 24 months.
And, the Cat Food Commission's proposed (inevitable) cuts to Social Security and Medicare will take the stage, front and center in our public's twisted dialogue, once again.
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Frankly, from my vantage point, which includes acknowledging all of the above nightmares, the reality is that "bipartisan cooperation" simply isn't going to cut it. So, I wholeheartedly agree with Krugman, on the Friday after mid-term elections, when he says: "There is an alternative: Mr. Obama can take a stand." Take capitulation OFF the table!
As the folks over at the Roosevelt Institute have reminded us today, the "Rules of Our Society Should Not Be Bought and Sold." Unfortunately, as we were glaringly reminded on Tuesday night, somebody forgot to send that memo to Capitol Hill.
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One more thing, while I'm clarifying my sentiments here, I'm NOT an economist. Nor do I play one in the blogosphere! Diarist's disclosure: HERE and HERE.