05/30/2012 archive

It’s where the money is.

Europe Fears Bailout of Spain Would Strain Its Resources

By LANDON THOMAS Jr., The New York Times

Published: May 30, 2012

At the root of Spain’s financing crisis has been a drastic outflow of foreign capital from the country – one that, paradoxically, has been accentuated by the European Central Bank’s much-vaunted program of providing low-cost three-year loans to European banks so that they might buy their governments’ bonds.

…

But in the case of Spain, the program evidently bought time by making the country’s underlying problems all the worse. Spanish banks have by far been the most aggressive participants in the cheap-loan program, having borrowed more than €300 billion from the E.C.B. And much of that money was spent on Spanish government bonds.

…

It’s not just Spain, either.

Italian banks have also been enthusiastic buyers of their government’s bonds, and they own 57 percent of bonds outstanding. As in the case of Spain, foreigners have been obliging sellers and have sold €242 billion worth of bonds to local banks, bringing their share in Italian bond holdings down to 35 percent as of this March compared with 51 percent late last year.

It is worth noting that just before the restructuring of private-sector Greek debt in March, foreign investors owned 32 percent of the bonds outstanding, a higher proportion than what foreigners now own in Spain.

The fact is this notional overestimation of wealth is going to have to come of the pockets of the rich because that’s where the money is.  If you seized everything from the bottom 50% it simply wouldn’t be enough.

Florida: Hundreds of eligible citizens in Miami-Dade Co alone told they are ineligible to vote

By Gaius Publius, Americablog

5/29/2012 09:15:00 AM

So how does this play out? Here’s one way – Falsely disenfranchized Floridians appeal to Obama’s Justice Dept. Eric Holder makes noises that “this is an outrage.” Republicans make noises that “this is just political, and besides (shh, Holder has, well, melatonal ties that disqualify his etc., but shh).”

The White House, certain of November victory anyway, decides to back down. No need to ruffle R feathers.

Holder then makes all the right public noises, but does little to actually block this. (My best guess at the explanation: it’s a matter for “the courts,” plus something about the “states.”)

I really really want to be wrong. Let’s watch together, shall we? 115,000 purged eligible voters isn’t small beer.

“Punting the Pundits” is 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.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

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Katrina vanden Heuvel: Time to fight for a minimum wage increase

The federal minimum wage is now $7.25 cents an hour, about $15,080 for a full time, year round worker. At that level, it means poverty wages for a family of three, and weakened demand for the economy. As Cardinal Timothy M. Dolan and New York’s bishops concluded, this leaves workers “on the brink of homelessness, with not enough in their paychecks to pay for the most basic of necessities, like food, medicine or clothing for their children.”

Poverty wages offend both justice and common sense. It is time to raise the floor.

If today’s minimum wage were at its previous height in 1968, adjusted for inflation, it would be over $10.00 an hour.

The Economic Policy Institute (EPI) estimates that the recently-introduced proposal by Sen. Tom Harkin (D-Iowa) to lift the minimum wage to $9.80 over three years would give 28 million workers a raise. In a time of faltering growth, this money would be immediately spent, a direct boost to demand and the economy.

Bryce Covert: Income Inequality Keeps Poorer Americans Away from the Polls

It’s no secret that money and politics enjoy a nasty love affair in this country. And as Ari Berman has written here, the problem has gotten even worse this cycle after the ill-fated Citizens United decision unleashed the power of Super PACs. As he reports, campaigns are increasingly reliant on that money, yet “Super PACs on both sides of the aisle are financed by the 1 percent of the 1 percent.” That means the rich have an even more outsized impact on the outcome of the election.

At the same time, it’s been hard to miss the GOP’s relentless campaign to roll back voting rights in the name of eliminating the (mostly imaginary) threat of fraud. Many of those tactics will severely impact low-income voters and likely suppress their turnout in November, handing even more power over to the 1 percent.

There’s something else that suppresses their vote, however, even if they are legally able to do so. And that something is income inequality, as a new report from the OECD on the Better Life Index shows. Of the thirty-four countries included in the report, the U.S. ranks second to last in social inequality, bested only by South Korea. When it comes to income inequality we are at the extreme end of the scale, with levels similar to those of Cameroon, Rwanda, Sri Lanka, Ecuador, Nepal and Uganda.

Morons AND Assholes.  Stupid AND Evil.  Masters of the Universe?  Pampered Privileged Pricks!

The IMF on UK macroeconomic policy: Part 1

Martin Wolf, Financial Times

May 25, 2012 4:43 pm

How long then is a change in policy supposed to wait?

I find it hard to believe that the Fund staff disagree that action is needed right now. It is far more likely that they (and, not least, the IMF’s Managing Director, Christine Lagarde) felt unable to take on the government of what remains an important member country. That is also what the BBC’s Stephanie Flanders suggests in her excellent post, “IMF: ‘Great Policies: Shame about the Economy‘.”

The time for aggressive fiscal consolidation is when the economy – by which I mean spending by the private sector – is strong, not weak, as it is now. What, then, is the argument against using fiscal policy more aggressively, to support the economy now? As Jonathan Portes, director of the National Institute for Economic and Social Research, notes, it is very hard to make one.

The principal argument against any fiscal action now, apart from the hope against implausible hope that monetary policy is going to do the job, even though interest rates are almost zero and the Bank of England has indulged in substantial “quantitative easing”, is that it will destroy the government’s credibility, lead to a rapid spike in interest rates and so weaken the economy, rather than strengthen it.

The IMF on UK macroeconomic policy: Part 2

Martin Wolf, Financial Times

May 28, 2012 5:52 pm

(A) willingness to make determined use of fiscal policy should also reduce the uncertainty of decision-makers about the likely direction of the economy. If businesses think the authorities are not determined to sustain demand, they are right to be more cautious. Ultimately, the government insures business against the macroeconomic risks of investment, via its determination to sustain demand in a slump. But the government has shown no such determination, with effects on the willingness of business to invest that we now see. Thus, the very determination to act might make a huge difference to the outcome for the economy.

In brief, the endlessly repeated “credibility” arguments against a change in fiscal policy are feeble. The UK has fiscal levers at its disposal and should use them.

What is true, however, is that a change would weaken the government’s credibility. But this is because the government made an unwise commitment.

(h/t Herr Docktor)

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

Click on image to enlarge

May 30 is the 150th day of the year (151st in leap years) in the Gregorian calendar. There are 215 days remaining until the end of the year.

On this day in 1922, Former President William Howard Taft dedicates the Lincoln Memorial on the Washington Mall on this day in 1922. At the time, Taft was serving as chief justice of the U.S. Supreme Court.

Taft remains the only former president ever to hold a seat on the Supreme Court. He served from 1921 to 1930. He recalled his time on the court as his most rewarding career, later saying in his memoirs, I don’t remember that I was ever president.

History

The Lincoln Memorial, designed after the temples of ancient Greece, is significant as America’s foremost memorial to their 16th president, as a totally original example of neoclassical architecture, and as the formal terminus to the extended National Mall in accordance with the McMillan Plan for the monumental core of Washington.

Demands for a fitting memorial had been voiced since the time of Lincoln’s death. In 1867, Congress heeded these demands and passed the first of many bills incorporating a commission to erect a monument for the sixteenth president. An American, Clark Mills, was chosen to design the monument. His plans reflected the bombastic nationalistic spirit of the age. His design called for a 70-foot (21 m) structure adorned with six equestrian and 31 pedestrian statues of colossal proportions, crowned by a 12-foot (3.7 m) statue of Abraham Lincoln. However, subscriptions for the project were insufficient and its future fell into doubt.

The matter lay dormant until the turn of the century, when, under the leadership of Senator Shelby M. Cullom of Illinois, six separate bills were introduced to Congress for the incorporation of a new memorial commission. The first five bills, proposed in the years 1901, 1902, and 1908, met with defeat; however, the final bill (Senate Bill 9449), introduced on December 13, 1910, passed. The Lincoln Memorial Commission had its first meeting the following year and President William H. Taft was chosen as president. Progress continued at a steady pace and by 1913 Congress had approved of the Commission’s choice of design and location. However, this approval was far from unanimous. Many thought that architect Henry Bacon’s Greek temple design was far too ostentatious for a man of Lincoln’s humble character. Instead they proposed a simple log cabin shrine. The site too did not go unopposed. The recently reclaimed land in West Potomac Park was seen by many to be either too swampy or too inaccessible. Other sites, such as Union Station, were put forth. The Commission stood firm in its recommendation though, feeling that the Potomac Park location, situated on the Washington Monument–Capitol axis, overlooking the Potomac River and surrounded by open land, was an ideal site. Furthermore, the Potomac Park site had already been designated in the McMillan Plan of 1901 to be the location of a future monument comparable to that of the Washington Monument.

With Congressional approval and a $300,000 allocation, the project got underway. On February 12, 1914, an inauspicious dedication ceremony was conducted and following month the actual construction began. Work progressed steadily according to schedule. However a few changes did have to be made. The statue of Lincoln, originally designed to be 10 feet (3.0 m) tall, was later enlarged to 19 feet (5.8 m) to prevent it from being dwarfed by its huge chamber. As late as 1920, the decision was made to substitute an open portal for the bronze and glass grille which was to have guarded the entrance. Despite these changes, the Memorial was finished on schedule. In a (May 30) celebration in 1922, Commission president William H. Taft dedicated the Memorial and presented it to President Warren G. Harding, who accepted it for the American people. Lincoln’s only remaining son, 79 year old Robert Todd Lincoln, was in attendance.