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Oct 20 2010

Punting the Pundits

Punting the Punditsis an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Dean Baker: Timothy Geithner forecloses on the moratorium debate

By refusing to halt foreclosures to sort out the mortgage mess, the treasury secretary again shows his favour to Wall Street

Treasury Secretary Timothy Geithner is good at telling fairy tales. Geithner first became known to the general public in September of 2008. Back then, he was head of the New York Federal Reserve Board. He was part of the triumvirate, along with Federal Reserve Board chairman Ben Bernanke and then Treasury secretary Henry Paulson, who told congress that it had to pass the Tarp or the economy would collapse. . . . .

Now, Geithner has a new fairytale. This time, it is that if the government imposes a foreclosure moratorium, it will lead to chaos in the housing market and jeopardise the health of the recovery.

For the gullible, which includes most of the Washington policy elite, this assertion is probably sufficient to quash any interest in a foreclosure moratorium. But those capable of thinking for themselves may ask how Geithner could have reached this conclusion.

Amy Goodman: When Banks Are the Robbers

The big banks that caused the collapse of the global finance market, and received tens of billions of dollars in taxpayer-funded bailouts, have likely been engaging in wholesale fraud against homeowners and the courts. But in a promising development this week, attorneys general from all 50 states announced a bipartisan joint investigation into foreclosure fraud.

Bank of America, JPMorgan Chase, GMAC and other big mortgage lenders recently suspended most foreclosure proceedings, following revelations that thousands of their foreclosures were being conducted like “foreclosure mills,” with tens of thousands of legal documents signed by low-level staffers with little or no knowledge of what they were signing.

Then the Obama administration signaled that it was not supporting a foreclosure moratorium. Not long after, Bank of America announced it was restarting its foreclosure operations. GMAC followed suit, and others will likely join in. So much for the voluntary moratorium.

Dana Milbank: A Tea Party of populist posers

On the morning of Oct. 14, a cyber-insurgency caused servers to crash at the U.S. Chamber of Commerce.

The culprits, however, weren’t attacking the chamber; they were well-meaning citizens who overwhelmed the big-business lobbying group with a sudden wave of online contributions. It was one of the more extraordinary events in the annals of American populism: the common man voluntarily giving money to make the rich richer. . . .

A movement of the plutocrats, by the political professionals and for the powerful: Now that’s something Tea Partyers should be mad about.

Katrina vanden Heuvel: Predator’s ball

“Apres nous, le deluge.” Surely the reactionary gang of five on the Supreme Court should have cited Louis XV in their Citizens United  decision overturning precedent to open the floodgates to corporate campaign spending. For all the fixation on Tea Partyers, what is most notable about this election is the rising tide of money that is lifting many Republican candidates — and how it ultimately contradicts the message that GOP contenders are delivering to voters.

Only two months ago, Democratic Party operatives were boasting that the war chests of Democratic incumbents would repel Republican challengers. That was then. In the last quarter, Republican challengers surpassed Democratic incumbents in fundraising.

More important, the campaigns have been aided by an unprecedented wave of independent expenditures — over $150 million and rising, the vast bulk spent on attack ads against besieged Democrats. Many of these contributions are anonymous, made to nonprofit institutions that don’t have to reveal their donors. Karl Rove, infamous as George Bush’s political “brain,” has essentially displaced the Republican National Committee with his American Crossroads and Crossroads GPS organizations, claiming that they will dispense over $50 million into the elections.

Richard Reeves: Waiting for Another Watergate

There is, to say, a heated debate going on about all this secret money. Two distinguished debaters, David Brooks of The New York Times and Al Hunt of Bloomberg News, have taken opposite (and extreme) sides of the argument.

Brooks’ analysis appeared Tuesday under the headline: “Don’t Follow the Money.”

Hunt wrote two days earlier under the headline: “Watergate Return Inevitable as Cash Floods Elections.”

They are both commenting on the same set of facts: Because of the new Supreme Court decision, spending on next month’s House and Senate elections may top $4 billion, a record. Undisclosed cash, most of it from unnamed corporations, could be between $250 million and $500 million.

The last time we ran an election in the shadows was 1972. Watergate. That year, with the re-election campaign of President Nixon, cash literally flowed into the White House to beat the date that new campaign regulations came into effect. There were little piles and drawers full of cash on the desks of middle-level campaign officials. Where did that money come from? No one really knew. Where did it go? No one knows how much there was or where it all ended up.

That was the lesson of giving and taking money without transparency or accountability. It damned near brought down the country. If Hunt is right, and I think he is, we are in for more of the same. The only question now is the timing of the next Watergate.

Joseph Stiglitz: It is folly to place all our trust in the Fed

In certain circles, it has become fashionable to argue that monetary policy is a superior instrument to fiscal policy – more predictable, faster, without the adverse long-term consequences brought on by greater indebtedness. Indeed, some advocates wax so enthusiastic that they support recent drives for austerity in many European countries, arguing that if there are untoward effects they can be undone by monetary policy. Whatever the merits of this position in general, it is nonsense in current economic circumstances.

A quarter-century ago proponents of monetary policy argued, with equal fervour, in favour of monetarism: the most reliable intervention in the economy was to maintain a steady rate of growth in the money supply. Few would hold that now, as the velocity of circulation turned out to be less constant than the monetarists anticipated. Countries seduced by apparent certainties of monetarism found themselves in a highly uncertain world.

Traditionally, monetary authorities focus policy around setting the short-term government interest rate. But, leaving aside the fact that with interest rates near zero there is little room for manoeuvre, the impact on the real economy of changes in the interest rate remains highly uncertain. The fundamental reason should be obvious: what matters for most companies (or consumers) is not the nominal interest rate but the availability of funds and the terms that borrowers have to pay. Those variables are not determined by the central bank. The US Federal Reserve may make funds available to banks at close to zero interest rates, but if the banks make those funds available to small and medium-sized enterprises at all, it is at a much higher rate.

Wendell Potter: Thank You, UnitedHealth Group. Your Jaw-Dropping Profit Announcement May Be Just What the Doctor Ordered.

ORLANDO — If you are hopeful that the consumer protections in the health care reform law actually wind up benefiting consumers more than the insurance industry, please send a thank-you note to executives at UnitedHealth Group, the largest U.S. health insurer.

United announced Tuesday morning that its third-quarter profit jumped 23% — much more than investors and analysts had expected — largely because it spent far less of its customers’ premiums on medical care than it did this time last year. When an insurance company spends less of every premium dollar it takes in on medical care, it has more left over to reward shareholders and a handful of senior managers who already are among the highest-paid executives on the planet. . . .

The timing of United’s embarrassment of riches, however, is causing great concern on Wall Street. Investors and analysts are keeping up with what is going on in Orlando more than anyone except perhaps insurance company executives. They know that the commissioners are expected to complete their work on the MLR regulations Thursday morning and send their recommendations to the Secretary of Health and Human Services, as the law stipulates. In a report Tuesday morning, Carl McDonald of Citigroup Investment Research wrote that United’s impressive numbers “couldn’t come at a worse time politically. We’re at a critical time juncture, as the Health and Human Services Secretary will soon provide final minimum MLR guidance and decide how often to grant MLR waivers. United beating its initial earnings guidance this year by over $1.6 billion pre-tax certainly doesn’t help the industry’s cause.”

You’re right, Carl. It is my pleasure to share your thoughts and the news about United’s big increase in earnings, made possible by the big decrease in its MLR, with all the commissioners down here in Orlando. By about noon on Thursday, we’ll find out whose side the commissioners are really on: consumers, whose interests by law they are supposed to protect, or insurance company executives and investors, who are far more interested in the value of stock options and earnings per share than they are with the health and well-being of their customers.

Yagil Hertzberg: How Democrats, Republicans compare

For years I have been trying to persuade supporters of the other major American party to change their mind and vote with me, to no avail. That is, until last week, when three politically minded friends came over for an evening of snacks and politics, and, halfway through the evening, I unleashed my new one-two approach to political persuasion.

First, I asked my friends how they would go about choosing a new dishwasher. We agreed that the responsible and rewarding method would be to ignore any marketing hype and instead follow the Best Buy recommendations by Consumer Reports. Because nobody mentioned the virtues or shortcomings of, say, Whirlpool’s executives as a valid criterion for choosing the appliance, I asked why they argue for hours about the perceived personalities of the candidates instead of comparing the track records of the major parties. My friends answered that it’s simple enough to summarize the essential properties of dishwashers, while the elections are about a large number of issues that defy easy tabulation. Therefore, they concentrate on the candidates, hoping that by choosing the right person for the job, the elected official will make the right decisions when dealing with all those different issues.

I used to share this view myself, but then I checked the numbers. I was surprised to find out that the results of comparing the track records of the two major parties fall neatly (with one exception) into two categories – economy and family values. In my analysis, I compared all administrations going back to 1960 and all states based on how they voted in the presidential elections since 1980.

It was time for the second phase. I presented my friends with a list of numbers. To overcome bias, I used symbols (A, B, C and D) to represent the two major parties under the two categories. All state-related numbers (including those for the District of Columbia) are per person.

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