midtowng's blog

A financial reform political circus

While the Senate and House have debated the health care reform endlessly, fighting tooth and nail at every step, all the while being broadcast on network television, the financial reform bill is quietly moving along under the radar. On the same day that Senator Dodd proposed his sweeping reform bill, it passed committee.

“The bill that finally passes on the floor will be a much more business-friendly bill,” Miller said today. “They won’t get a bill done until Dodd and Shelby agree on the compromise, but Republicans do want to get a bill done this year. So there’s incentive for both sides to come to agreement.”

The fact that the bill is going to be watered down even more is a sad statement to an on-going tragedy.

Why we are headed into Depression

It may be the one-year anniversary of an amazing stock market rally, but economists are sounding rather pessimistic these days.

A growing expectation of a double-dip recession is evident in a new poll of financial executives...the poll found more than half of financial executives predicting another downturn, and most expecting jobs recovery to lag into 2011.

The predictions don't end with just this poll. Nouriel Roubini is also warning of a second leg down, and even more disturbing is this report.

Enron Fun with Fannie and Freddie

Let me take you back to Christmas Eve, 2009. It was a time to wrap gifts for loved-ones. That's how the Obama Administration felt about the financial industry when it lifted all caps in emergency bailout money to Fannie Mae and Freddie Mac. That means the taxpayer was on the hook for all losses at these two mortgage giants no matter how large the losses.
The move caused a slight stir, but never got the attention of the American public because the announcement was timed to coincide with the peak season of distraction. And so it was forgotten...but not by Fannie and Freddie.

Why aren't these people in jail?

This may be the only time in my life I will ever utter these words: "We could learn a lot from Indonesia."

Indonesian police have used tear gas and water canon to disperse about 2,000 anti-government protesters who tried to enter the parliament building in the capital, Jakarta.
The scuffles broke out on Tuesday as members of parliament began a debate over the possible impeachment of the country's vice-president and finance minister.
His vice president, Boediono, and finance minister, Sri Mulyani Indrawati, approved the bailout and opposition leaders have demanded their resignation saying they must be held accountable for losses to the state.

What an amazing concept!

1.2 million Americans lose unemployment insurance today

Because of the Republicans new found concern for budget deficits, 1.2 million American families will be cut adrift today.

Nearly 1.2 million unemployed Americans - including 27,000 in Wisconsin - face an imminent cutoff of government unemployment checks if Congress cannot pass emergency legislation to extend federal benefits before funding expires Sunday.

Junk Economics and the middle class: Where we went wrong

I'm not so arrogant as to believe that I know the perfect solution to our economic problems. Anyone that tells you they know is either a fool or a liar.

However, that doesn't mean we can't discover where we went wrong once you apply a little logic and data to the situation.
For instance, if you realize you have taken a wrong turn, it makes more sense to turn around and go back to the corner where the mistake was made, than it does to drive in a general direction and hope you can find your way home.

When it comes to the economy, its pretty easy to discover when the wrong turn was made - 1972.

The war on the middle class

“Behind every great fortune lies a great crime.”
- Balzac

Capitalism hasn't failed. What has failed is the economic system in place today.
No amount of government taxes, trade barriers, or regulation caused it to fail.
No investigative reporter, or congressional oversight committee, or regulatory watchdog, exposed the massive fraud and corruption in the financial system today. All of the safeguards put in place to protect the public, and the current system from itself, failed.
The global financial crisis came to light because what amounts to a falling out amongst thieves. They simply stopped trusting the ability of each other to pay their debts. Once lending stopped, credit creation froze, and the Ponzi-scheme that parallels our financial system broke down.

PIGS and the ouzo effect

A strategist at the Deutsche Bank had something interesting to say last week regarding the economic crisis in southern Europe.

“The problems currently faced by peripheral Europe could be a dress rehearsal for what the U.S. and U.K. may face further down the road,” Jim Reid, a strategist at Deutsche Bank in London, wrote in a research note today.

It seems impossible that what is going on in Greece has anything to do with America. After all, Greece has defaulted on its debts so often over the last two centuries that you could almost set your watch to it. It was always contained in the past because Greece's economy is so small, so why would this time be different this time?

And yet, it isn't contained this time. It is spreading and no one knows how far it might go.

It's time to live within our means once again

The president had some bold words for the American public earlier this week. He said things that some people didn't want to hear. He talked about responsibility and sacrifices.

"We simply cannot continue to spend as if deficits don't have consequences, as if waste doesn't matter, as if the hard-earned tax dollars of the American people can be treated like Monopoly money, as if we can ignore this challenge for another generation.
". . . It's time to save what we can, spend what we must and live within our means once again."

- President Obama, 2010

After saying these bold words he then presented Congress with a plan for the largest deficit in American history. I guess politicians are immune from irony.

First of all, let's break down the budget itself.

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Tierra y Libertad

On January 29, 1911, a small band of 18 revolutionaries marched into Mexicali and seized the town, practically without firing a shot. Thus began one of the most unusual and controversial episodes in Mexican history.
These revolutionaries were not the typical warlords that Mexico was used to seeing. These revolutionaries had American volunteers, but not the sort of filibusters that Baja California was already very familiar with. In fact, this revolutionary movement had little in common with anything Mexico had experienced before or since.

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These revolutionaries weren't interested in just overthrowing the corrupt and repressive government, they wanted to overthrow society as well.