Aug 30 2010

The Big Fail

Monday Business Edition

It’s slowly starting to dawn on Institutional Democrats that they’re going to lose big in November.  The consequences are very real.  Racist Radical Reagan Republicanism is a proven failure.  And Institutional Democrats?  They’re a failure too because they knew what to do and didn’t do it.

I’ll put my policy prescription right up front, the only thing that will save Democrats at this point is massive downsizing- Rahm Emanuel, David Axelrod, Gibbs, Geithner and Summers, Salazar and Duncan.  Do I want heads on pikes?  Figuratively, yes.  These highly paid strikeout kings and clubhouse malcontents have to go for the good of the team.

And if not I hope you’re happy with the crappy offices that come with minority status and one term Presidencies you corporatist whores.  Anyone who claims to care about “electoral victory” is a liar.

It’s Witch-Hunt Season

By PAUL KRUGMAN, The New York Times

Published: August 29, 2010

So what will happen if, as expected, Republicans win control of the House? We already know part of the answer: Politico reports that they’re gearing up for a repeat performance of the 1990s, with a “wave of committee investigations” – several of them over supposed scandals that we already know are completely phony. We can expect the G.O.P. to play chicken over the federal budget, too; I’d put even odds on a 1995-type government shutdown sometime over the next couple of years.

It will be an ugly scene, and it will be dangerous, too. The 1990s were a time of peace and prosperity; this is a time of neither. In particular, we’re still suffering the after-effects of the worst economic crisis since the 1930s, and we can’t afford to have a federal government paralyzed by an opposition with no interest in helping the president govern. But that’s what we’re likely to get.

If I were President Obama, I’d be doing all I could to head off this prospect, offering some major new initiatives on the economic front in particular, if only to shake up the political dynamic. But my guess is that the president will continue to play it safe, all the way into catastrophe.

Opposition Pay-offs

by Dave Anderson, 2010 August 29

The stimulus as passed in ARRA was necessary but insufficient.  It was too small at the topline number for the size of the output gap we actually faced (as the recession was deeper than the earlier data showed) and poorly designed with too much money going to AMT fixes and ineffective lump-sum tax-cuts.  The effective parts were pared back to please Sens. Collins, Snowe and Nelson.  And this was because the Republican Party realized they were the opposition and the job of the opposition is to oppose.  It also was because the Obama Administration likes to punch dirty fucking hippies, especially when they are right on the math and the political outcomes.

What Can Obama Really Do?

by Ian Welsh, 2010 August 29

The idea that Obama, or any President, is a powerless shrinking violet, helpless in the face of Congress is just an excuse.  Presidents have immense amounts of power: the question is whether or not they use that power, and if they do, what they use it for.

If Obama is not using that money and authority, the bottom line is it’s because he doesn’t want to.

Putting aside the question of what Obama could have accomplished already, if he wants to help everyday Americans, turn around Democratic approval ratings in time for the midterm elections, and leave behind him a legacy of achievement, he can still do it. If he wants to.

The Two Stories of This Terrible Economy, Yet Obama and the Dems Won’t Tell Theirs

Robert Reich, Friday, August 27, 2010

If Obama and the Democrats would connect these dots they’d have a story that would make Americans’ hair stand on end. We’re in this mess because of big business and Wall Street. Government is needed to get us out of it.

So why haven’t Obama and the Dems succeeded yet? Big business and Wall Street have used their money and political clout to stop government from doing as much as needs to be done.

The story is clear, and it has the virtue of being the truth. Why won’t Obama and the Democrats tell it? Is it because big business and Wall Street have the money and political clout even to prevent the story from being told?

Policy Options Dwindle as Economic Fears Grow

By PETER S. GOODMAN, The New York Times

Published: August 28, 2010

“There are many ways in which you can see us almost surely being in a Japan-style malaise,” said the Nobel-laureate economist Joseph Stiglitz, who has accused the Obama administration of underestimating the dangers weighing on the economy. “It’s just really hard to see what will bring us out.”

Japan’s years of pain were made worse by deflation – falling prices – an affliction that assailed the United States during the Great Depression and may be gathering force again. While falling prices can be good news for people in need of cars, housing and other wares, a sustained, broad drop discourages businesses from investing and hiring. Less work and lower wages translates into less spending power, which reinforces a predilection against hiring and investing – a downward spiral.

Deflation is both symptom and cause of an economy whose basic functioning has stalled. It reflects too many goods and services in the marketplace with not enough people able to buy them.

Banks’ Self-Dealing Super-Charged Financial Crisis

by Jake Bernstein  and Jesse Eisinger, ProPublica

Aug. 26, 10:09 p.m.

Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history.

Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses:

They created fake demand.

More Business News below.

Obama’s Old Deal

Why the 44th president is no FDR-and the economy is still in the doldrums.

by Michael Hirsh, Newsweek

August 29, 2010

Barack Obama was “incredulous” at what he was hearing, said one of his top economic advisers. The president had spent his first year in office overseeing the biggest government bailout of the financial industry in American history. Together with Federal Reserve chairman Ben Bernanke, he had kept Wall Street afloat on a trillion-dollar tide of taxpayer money. But the banks were barely lending, and the economy was still mired in high unemployment. And now, in December 2009, the holiday news had started to filter out of the canyons of lower Manhattan: Wall Street’s year-end bonuses would actually be larger in 2009 than they had been in 2007, the year prior to the catastrophe. “Wait, let me get this straight,” Obama said at a White House meeting that December. “These guys are reserving record bonuses because they’re profitable, and they’re profitable only because we rescued them.” It was as if nothing had changed. Even after a Depression-size crash, the banks were not altering their behavior. The president was being perceived, more and more, as a man on the wrong side of an incendiary issue.

And so, prodded forward by Vice President Joe Biden-the product of a working-class upbringing in Scranton, Pa.-the president began to consider getting tougher on Wall Street. “We kept revisiting it,” said the economic adviser (who recounted details of the meetings only on condition of anonymity). One big proposal the White House hadn’t adopted was Paul Volcker’s idea of barring commercial banks from indulging in heavy risk taking and “proprietary” trading. In Volcker’s view, America’s major banks, which enjoy federal guarantees on their deposits, had to stop putting taxpayer money at risk by acting like hedge funds. This had become a grand passion for Volcker, a living legend renowned for crushing inflation 30 years before as Fed chairman. He had long been skeptical of financial deregulation. Beyond the ATM, Volcker asked, what new banking products had really added to economic growth? Exhibit one for this argument was derivatives, trillions of dollars in “side bets” placed by Wall Street traders. “I wish somebody would give me some shred of neutral evidence about the relationship between financial innovation recently and the growth of the economy,” he barked at one conference.

Yet for most of that first year, Obama and his economic team had largely ignored Volcker, a sometime adviser. Treasury Secretary Tim Geithner and chief economic adviser Larry Summers still questioned whether Volcker’s proposals were feasible. Now Obama was pressing them-very gingerly-to reconsider. “I’m not convinced Volcker’s not right about this,” Obama said at one meeting in the Roosevelt Room. Biden, a longtime fan of Volcker’s, bluntly piped up: “I’m quite convinced Volcker is right about this!”

Bankers Told Recovery May Be Slow

By SEWELL CHAN, The New York Times

Published: August 28, 2010

JACKSON HOLE, Wyo. – The American economy could experience painfully slow growth and stubbornly high unemployment for a decade or longer as a result of the 2007 collapse of the housing market and the economic turmoil that followed, according to an authority on the history of financial crises.

The Reinharts examined 15 severe financial crises since World War II as well as the worldwide economic contractions that followed the 1929 stock market crash, the 1973 oil shock and the 2007 implosion of the subprime mortgage market.

In the decade following the crises, growth rates were significantly lower and unemployment rates were significantly higher. Housing prices took years to recover, and it took about seven years on average for households and companies to reduce their debts and restore their balance sheets. In general, the crises were preceded by decade-long expansions of credit and borrowing, and were followed by lengthy periods of retrenchment that lasted nearly as long.

op. cit.

(T)he recent slowing of the recovery cast a pall on this year’s gathering. As economists (some wearing jeans and cowboy boots) conferred on a terrace with a sweeping view of the 13,770-foot peak of Mount Teton, or watched a horse trainer tame an unruly colt at a nearby ranch, they anxiously discussed research like Ms. Reinhart’s. (Participants pay to attend the event, which is not financed by taxpayers, a Kansas City Fed spokeswoman emphasized.)

From Yahoo News Business

1 Japan announces fresh stimulus measures

by Kyoko Hasegawa, AFP

50 mins ago

TOKYO (AFP) – Japan on Monday unveiled an 11 billion dollar stimulus and announced monetary steps to safeguard a fragile economy and curb the impact of a strong yen, but markets were left unimpressed.

Prime Minister Naoto Kan announced the 920 billion yen stimulus package and the central bank extended a multi-billion-dollar loan scheme in a bid to boost an economy beset by deflation and curb the strength of the yen.

Kan said the plan will include steps to boost employment for graduates, investment in green industries and support for smaller businesses and measures to boost consumption, adding it would get final approval on September 10.

2 Zara takes the plunge into crowded online market

by Katell Abiven, AFP

Sat Aug 28, 11:19 pm ET

MADRID (AFP) – Europe’s largest clothing retailer, Spain’s Inditex, is taking its flagship Zara brand online, but it can expect stiff competition from other giants of high-street fashion already well-established in cyberspace.

Zara’s virtual boutique will be available on Thursday in selected European markets: Spain, Germany, France, Italy, Portugal and Britain.

From 2011, it will be expanded to the United States, Japan and South Korea.

3 Wall Street awaits US jobs report

by Ron Bousso, AFP

Sat Aug 28, 12:00 pm ET

NEW YORK (AFP) – Wall Street may be in for another rocky week, as traders brace for negative data topped by an expected rise in the US unemployment rate that could dampen economic recovery prospects.

All eyes will turn to the release of the monthly employment data next Friday, with most analysts forecasting non-farm payrolls to fall by 118,000 in August and unemployment to edge up to 9.6 percent from the current 9.5 percent rate.

“The most important number by far is going to be the job numbers on Friday. It is key to the entire economy and we haven’t had very good news lately about that,” said analyst Nicholas Colas of ConvergEx Group.

4 Singapore ramps up measures to cool property market


Mon Aug 30, 2:08 am ET

SINGAPORE (AFP) – Singapore on Monday announced fresh anti-speculation measures to cool its private property market as the city-state’s double-digit economic growth keeps upward pressure on demand.

Owners who sell houses and apartments less than three years after buying them will have to pay a duty of three percent of the resale value — a measure previously applicable to transactions within one year of the purchase.

For buyers with at least one outstanding loan, the minimum cash down payment was raised from five to 10 percent of valuation, while the maximum amount a bank can lend was capped at 70 percent, down from 80 percent.

5 Boeing further delays delivery of first Dreamliner


Fri Aug 27, 10:19 am ET

TOKYO (AFP) – Aerospace giant Boeing said Friday it would further delay the delivery of its first 787 Dreamliner aircraft until early next year, in another set-back for the troubled jet programme.

Boeing said it now expects to deliver the first Dreamliner in the middle of the first quarter of 2011 as it continues to carry out tests on the beleaguered plane, which is already more than two years behind schedule.

Confirmation that Boeing will not be able to hand over the first aircraft to Japan’s All Nippon Airways (ANA) this year came in a statement released in the US and Japan, after it warned in July it may have to delay.

6 Sanofi proposal heaps pressure on Genzyme

By Nina Sovich and James Regan, Reuters

47 mins ago

PARIS (Reuters) – Pressure mounted on Genzyme as its shares rose 6 percent in Europe a day after French drugmaker Sanofi-Aventis made public its month-old proposal to buy the U.S. biotech for $18.5 billion.

Sanofi Chief Executive Chris Viehbacher confirmed his $69 per share non-binding cash offer for Genzyme on Sunday, hinting he could make a hostile takeover bid following several unsuccessful attempts to hold talks with Genzyme management.

The French group stopped short of making a direct approach to Genzyme shareholders, however, and Viehbacher sounded a conciliatory tone in an interview with Les Echos newspaper that nonetheless suggested there was a limit to his patience.

7 BOJ eases policy to fight yen rise but impact seen slim

By Leika Kihara, Reuters

2 hrs 49 mins ago

TOKYO (Reuters) – The Bank of Japan expanded its cheap loan scheme on Monday, heeding government calls for action to curb a rise in the yen that threatens a fragile economic recovery and leaving the door open to more policy easing.

The yen surged more than 1 percent against the dollar after the central bank beefed up the supply of fixed-rate loans to banks, a move investors saw as a symbolic gesture that will do little to halt a climb in the currency that hurts exports and may prolong deflation.

“Today’s move is not a bold move,” said Simon Wong, regional economist at Standard Chartered Bank in Hong Kong. “If the yen continues to appreciate, say it appreciates beyond the 80 level, that could trigger more direct intervention at some point.”

8 Agrium says keen on Potash assets if BHP sells

By Bruce Hextall, Reuters

Mon Aug 30, 3:39 am ET

SYDNEY (Reuters) – Canada’s Agrium Inc said it would be interested in Potash Corp’s nitrogen and phosphates business, worth an estimated $12 billion, if miner BHP Billiton secures its $39 billion Potash takeover and decides to sell the assets.

Agrium Chief Executive Mike Wilson said on Monday his fertilizer and agricultural company was strong financially and would look at any assets up for grabs. His comments came after BHP told analysts it could look to divest Potash’s nitrogen and phosphates operations.

“We are a global company that produce 8 million metric tonnes of nitrogen, phosphate and potash and markets 16 million so any assets that came on the market that fits with us we would certainly look at,” Wilson told Reuters in an interview.

9 Obama says economy not growing fast enough

By Caren Bohan, Reuters

Mon Aug 30, 12:05 am ET

WASHINGTON (Reuters) – President Barack Obama said on Sunday the U.S. economy was expanding, but not quickly enough, and there was no “magic bullet” that will fix its problems.

Obama said in an NBC interview that the batch of grim economic data over the past few weeks was something his administration had anticipated.

Gloomy reports on gross domestic product and housing have raised fears the fragile economy could slip back into a recession or face a lengthy period of growth that is too slow to make much of a dent in the 9.5 percent unemployment rate.

10 Investors embark on treacherous month

By Edward Krudy, Reuters

Sun Aug 29, 11:30 am ET

NEW YORK (Reuters) – Beaten-up investors go into September, historically a weak month for stocks, facing key reports on jobs, manufacturing and services. If those disappoint, the S&P 500 could breach technical support levels, pushing stocks yet lower.

The S&P 500 index has fallen nearly 13 percent since April as investors fret about the chance of a double-dip recession. But the index has found solid support around the 1,040 level, with a sustained move below that proving tough.

Federal Reserve Chairman Ben Bernanke boosted stocks on Friday by signaling the Fed is ready to act if the economy worsens. But more weakness in upcoming indicators like non-farm payrolls and Institute for Supply Management surveys would intensify fears the economy is sliding back into recession.

11 Jobs data to show severity of malaise

By David Lawder, Reuters

Sun Aug 29, 3:01 pm ET

WASHINGTON (Reuters) – The patient clearly looks ill, but is there at least a steady pulse?

August U.S. payrolls and other data this week will provide critical evidence on whether the U.S. economy is slipping into a coma of barely perceptible growth, as some economists fear.

“Our view is that the recovery is petering out, not sliding into a double dip,” said Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, North Carolina. “In our mind, the employment situation likely deteriorated in August.”

12 Japan eases policy, plans new economic stimulus

By TOMOKO A. HOSAKA, Associated Press Writer

57 mins ago

TOKYO – Japan’s government and the central bank threw the economy a double lifeline Monday, seeking to contain a strong yen and revive a faltering recovery.

To boost liquidity, the central bank unveiled a new six-month low-interest loan program to financial institutions. Combined with an existing three-month funds-supplying operation worth 20 trillion yen ($236 billion), banks will now have access to a total of 30 trillion yen ($355 billion).

The 8-1 decision by the central bank’s policy board was accompanied by an unanimous vote to keep its key interest rate at a super-low 0.1 percent.

13 China in global talent search for state companies

By JOE McDONALD, AP Business Writer

2 hrs 42 mins ago

BEIJING – China’s government announced a global talent search Monday to fill top posts at 12 major state-owned companies in its latest effort to turn huge but inefficient government enterprises into global competitors.

Communist leaders want to build up 30 to 50 state companies as national champions in fields from oil to banking to airlines. Some are among the biggest in their global industries due to their protected position in China’s huge market but authorities acknowledge they lag behind foreign rivals in skills and efficiency.

State industries have hired managers from abroad but Monday’s announcement by the Cabinet agency that runs China’s biggest state companies was the most high-profile recruitment effort to date.

14 Calif. rare fruit growers meet to swap seeds, tips

By RAQUEL MARIA DILLON, Associated Press Writer

1 hr 21 mins ago

POMONA, Calif. – Persimmon grower Jim Bathgate handed out tiny yellow peaches to others at the California Rare Fruit Growers’ annual “Festival of Fruit” and watched with anticipation as they bit into the sweet and juicy flesh.

The fruit grew on a peach tree that sprouted accidentally in Bathgate’s persimmon grove, and he eagerly collected the sticky pits to plant more.

Bathgate was one of hundreds of rare fruit aficionados gathered to share seeds, cuttings and knowledge. The organization founded in 1968 encourages gardeners and hobby farmers to plant unusual fruit instead of commonplace fare, such as apples and oranges. Members search the globe for new varieties or seek to develop tastier, heartier strains suitable for backyard growing.

15 BP’s life on frontiers of energy industry at risk

By JANE WARDELL, AP Business Writer

Sun Aug 29, 2:51 pm ET

LONDON – At a celebration of BP’s centennial last October, CEO Tony Hayward boasted to guests that the oil company “lives on the frontiers of the energy industry.”

But this week, in the first major sign that the Gulf of Mexico oil spill may have caused lasting damage to the company’s long-term strategy of embracing projects with high risks, BP was frozen out of a potentially lucrative license to drill for oil off the coast of Greenland.

The Arctic setback comes as BP’s plans to begin deep-water drilling in Libya and the North Sea have been delayed, and its vast offshore U.S. operations remain under a cloud.

16 Asia assesses prospects as world recovery stumbles

By KELLY OLSEN, AP Business Writer

Sun Aug 29, 4:01 pm ET

SEOUL, South Korea – Talk of the global economic recovery fizzling doesn’t faze Cho Byung-cheol, president of a small South Korean technology company that has already set up a branch in China and plans one soon in the United States.

The company, which designs and makes semiconductor-based high-speed data storage and processing equipment, is planning to boost its South Korean workforce of nearly 60 by half, says Cho, who founded Seoul-based Taejin Infotech Co. in 1996. Sales, which totaled only 8.4 billion won ($7 million) last year, could swell fourfold this year and reach 100 billion won next year, he predicts.

Sitting in his spacious, well-ordered office, Cho’s confidence belies the grim mood that has settled over global stock markets in the past month as indicators from the U.S. to Japan show the economic rebound is running out of juice.


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  1. ek hornbeck

    I told you so.

  2. ek hornbeck


    Jay Ackroyd, Eschaton

    Monday, August 30, 2010 07:42

    There is a lot the administration could have accomplished that the progressive base would have praised. Sometimes this would have entailed doing something, like DADT, that was expected and promised. Other times, this would have entailed taking stronger action in response to events, as with health care reform and job creation. So there is handwringing, excuses offered, and worse, on whose fault it is that liberals have not been overjoyed with the administration.

    So what can Obama really do?

  3. ek hornbeck

    So the good scenario – the worst is over – unemployment will drop all the way down to 9% by the end of 2011!!

    In January 2009, the administration projected that unemployment would drop below 7% by the end of 2011, without any stimulus.

  4. BobbyK

    will be quite a spectacle this fall.

    It’ll be interesting to see how the MSM diminishes liberal discontent and blames the bloodbath on center-right sensibilities.

  5. Cold Blue Steel

    looks like a good site to bookmark.

  6. valadon

    I think we are going to lose big

    time too and it’s the Democrat’s own fault. They wouldn’t listen to us. We were supposed to make them do it! and all that BS…but we are retarded and the professional Left…yet we were RIGHT!!!! AGAIN!!! and we were relegated to:


  7. TMC

    who have been telling us and the President that his policies would not improve the economy. We were told what was needed and the majority was all for whatever it took. The President chose to listen to the Wall St. insiders and their cronies, his advisors. Now, not only are we suffering the consequences for the wrong paths that were taken, but mot likely, so will the President and the Democrats this fall.

  8. ek hornbeck

    And I’ll keep on voting until I get it.

  9. TMC

    that we on the left will be blamed for being “purists”.

  10. BobbyK

    Bring it on.

    They’ll just be proving the Naderite’s point.

    When there’s No meaningful difference between the Rs & the Ds. Who cares who wins.

    The meaningless investigations into Bo’s vet bills that come with the Rs victory will be just the right speed for the media idiots.

    Fiddleing away as Rome burns.

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