June 2012 archive

MSNBC and other news outlets are calling the Wisconsin recall of Republican Governor Scott Walker for Gov. Walker.

Scott Walker, the embattled Republican governor of Wisconsin, narrowly survived a recall vote on Tuesday, defeating a union-led effort to remove him from office for pushing laws to restrict the collective bargaining rights of state workers.

The state’s labor movement had marshaled widespread anger earlier this year to force a recall vote just two years into Mr. Walker’s four-year term. Democrats collected close to one million signatures in the petition drive to oust him.

That effort led to the closely-watched rematch between Mr. Walker and the Democratic opponent he beat in 2010, Tom Barrett, the mayor of Milwaukee. In the voting Tuesday, Mr. Walker once again bested Mr. Barrett for the state’s top job.

The results were a victory for the national Republican Party and conservative groups from around the country, which had rallied behind Mr. Walker with tens of millions of dollars. Mr. Walker will now complete his term.

Unless, he’s indicted.

“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”.

Follow us on Twitter @StarsHollowGzt

Richard (RJ) Eskow: “Middle-Class Millionaires”? Dissecting a Democrat’s Misguided Move

Once again, a Democrat’s letting the Right set the terms of the debate. This time it’s House Minority Leader Nancy Pelosi, who’s undercutting her party’s tax policy in an odd way: by redefining “middle class” so that it includes people making a million dollars a year.

Pelosi’s proposal would be great for millionaires — and bad for everyone else.

It hurts the nation economically by depriving the government of revenue when it should be providing more stimulus funding. It also muddies her party’s messaging, and reinforces the unpatriotic idea that taxes are punishment rather than a fair exchange. Nancy Pelosi is better than this.

Robert Kuttner: Can Merkel Be Moved?

Berlin — Ever since the march to European union began in the late 1940s, French-German collaboration has been at the heart of the project. Until the recent defeat of French President Nicolas Sarkozy, his close alliance with German Chancellor Angela Merkel continued this tradition, albeit on behalf of policies that have driven Europe deeper into depression and inflicted brutal austerity on smaller nations such as Greece and Portugal.

With the May 6 election of French Socialist Francois Hollande on an anti-austerity program, Paris and Berlin are now at odds. If a Social Democratic-Green coalition wins next year’s German elections, expected in September 2013, that would create a progressive Paris-Berlin axis.

There are, however, two huge problems. September 2013 is an eternity away and the European project could go up in smoke in the meantime. The other problem is German public opinion.

After the latest gambling losses by JP Morgan Chase with its “London Whale” deal, the FDIC is still trying to sell the fantasy that they can resolve the problems created by the megabanks. Yves Smith at naked capitalism takes on that myth that was propagated by acting FDIC Chairman, Martin Gruenberg to continue with business as usual:

The guts of the latest FDIC scheme is to resolve only the holding company and keep the healthy subsidiaries, including all foreign subsidiaries, going on a business-as-usual basis:

   …the most promising resolution strategy from our point view will be to place the parent company into receivership and to pass its assets, principally investments in its subsidiaries, to a newly created bridge holding company. This will allow subsidiaries that are equity solvent and contribute to the franchise value of the firm to remain open and avoid the disruption that would likely accompany their closings. Because these subsidiaries will remain open and operating as going-concern counterparties, we expect that qualified financial contracts will continue to function normally as the termination, netting and liquidation will be minimal.

The subsidiaries would be moved over to a new holding company; the equity in NewCo would become an asset of the holding company now in receivership. The old equityholders would likely be wiped out and the bondholders may wind up taking losses.

This all sounds wonderfully tidy and neat, right? Problem is it won’t work. [..]

Remember that in the US, banks (ex Morgan Stanley) have their derivatives booked in the depositary, which means any losses to depositors as a result of derivatives positions gone bad would be borne by taxpayers. And as we’ve written at excruciating length with respect to the Lehman bankruptcy, the magnitude of the losses cannot be explained by overvalued assets plus the costs resulting from the disorderly collapse. Derivatives positions blowing out (as well as counterparties taking advantage of options in how contracts can be closed out and valued) were a major contributor to the size of the Lehman black hole. [..]

It would have been much better for the authorities to make a full bore effort to discourage the use of products that have limited social value and contribute to the excessive integration of firms and markets. Credit default swaps and complex over-the-counter derivatives top our list. But despite the severity of the crisis, regulators and politicians were unwilling to challenge the primacy of the bankers, with the result that the FDIC continues to pretend that an inadequate approach like Dodd Frank resolutions will work. With distress in Europe rising and Morgan Stanley looking wobbly, we are likely to see sooner rather than later how much the failure to implement real reforms will cost us all.

If this sounds all too familiar, it’s because this is just a repeat of the old an stale propping up of TBTF that got the economy into this mess in the first place. In other words, the tax payers will foot the bill for the megabanks gambling losses once again. Obama needs a whole new council of economic advisors with people who have better ideas like Paul Krugman and Yves.

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

June 5 is the 156th day of the year (157th in leap years) in the Gregorian calendar. There are 209 days remaining until the end of the year

1933, the United States went off the gold standard, a monetary system in which currency is backed by gold, when Congress enacted a joint resolution nullifying the right of creditors to demand payment in gold. The United States had been on a gold standard since 1879, except for an embargo on gold exports during World War I, but bank failures during the Great Depression of the 1930s frightened the public into hoarding gold, making the policy untenable.

Soon after taking office in March 1933, Roosevelt declared a nationwide bank moratorium in order to prevent a run on the banks by consumers lacking confidence in the economy. He also forbade banks to pay out gold or to export it. According to Keynesian economic theory, one of the best ways to fight off an economic downturn is to inflate the money supply. And increasing the amount of gold held by the Federal Reserve would in turn increase its power to inflate the money supply. Facing similar pressures, Britain had dropped the gold standard in 1931, and Roosevelt had taken note.

Prolongation of the Great Depression

Some economic historians, such as American professor Barry Eichengreen, blame the gold standard of the 1920s for prolonging the Great Depression. Others including Federal Reserve Chairman Ben Bernanke and Nobel Prize winning economist Milton Friedman lay the blame at the feet of the Federal Reserve. The gold standard limited the flexibility of central banks’ monetary policy by limiting their ability to expand the money supply, and thus their ability to lower interest rates. In the US, the Federal Reserve was required by law to have 40% gold backing of its Federal Reserve demand notes, and thus, could not expand the money supply beyond what was allowed by the gold reserves held in their vaults.

In the early 1930s, the Federal Reserve defended the fixed price of dollars in respect to the gold standard by raising interest rates, trying to increase the demand for dollars. Its commitment and adherence to the gold standard explain why the U.S. did not engage in expansionary monetary policy. To compete in the international economy, the U.S. maintained high interest rates. This helped attract international investors who bought foreign assets with gold. Higher interest rates intensified the deflationary pressure on the dollar and reduced investment in U.S. banks. Commercial banks also converted Federal Reserve Notes to gold in 1931, reducing the Federal Reserve’s gold reserves, and forcing a corresponding reduction in the amount of Federal Reserve Notes in circulation. This speculative attack on the dollar created a panic in the U.S. banking system. Fearing imminent devaluation of the dollar, many foreign and domestic depositors withdrew funds from U.S. banks to convert them into gold or other assets.

The forced contraction of the money supply caused by people removing funds from the banking system during the bank panics resulted in deflation; and even as nominal interest rates dropped, inflation-adjusted real interest rates remained high, rewarding those that held onto money instead of spending it, causing a further slowdown in the economy. Recovery in the United States was slower than in Britain, in part due to Congressional reluctance to abandon the gold standard and float the U.S. currency as Britain had done.

Congress passed the Gold Reserve Act on 30 January 1934; the measure nationalized all gold by ordering the Federal Reserve banks to turn over their supply to the U.S. Treasury. In return the banks received gold certificates to be used as reserves against deposits and Federal Reserve notes. The act also authorized the president to devalue the gold dollar so that it would have no more than 60 percent of its existing weight. Under this authority the president, on 31 January 1934, fixed the value of the gold dollar at 59.06 cents.

   Thomas Mann of the Brookings Institution and Norman Ornstein of the American Enterprise Institute make their first appearance on a Sunday news program since the release of their controversial new book, “It’s Even Worse Than It Looks: How the American Constitutional System Collided with the New Politics of Extremism.” Mann and Ornstein talk with Up host Chris Hayes and panelists Michelle Bernard, of the Bernard Center, and MSNBC political analyst Michael Steele talk about what they say is the extreme rightward drift of the Republican Party.

From Raw Story:

Mann explained that the separation of powers provided for by our Constitution deliberately creates a situation in which that Congressional majorities are unable to act without some degree of cooperation with the other party. Now that “one of those political parties has veered off the tracks” and become “aggressively oppositional,” it has many tools available to prevent legislation from being passed or enforced.

Ornstein singled out the filibuster as a large part of the problem, because it is being “used routinely,” even on non-controversial legislation. However, he also pointed to Republicans voting even against their own bills in order to avoid giving President Obama anything that would look like a victory.

The elephant in the room is that ideology and obstruction may now be the norm but the Democrats had the opportunity, and still do, to stop the filibuster in the Senate. Thus, the Democrats become the enablers of bad behavior.  

The vote to recall Wisconsin’s Republican Tea Party Governor Scott Walker is tomorrow. The latest Public Policy Polling results has his challenger Milwaukee Mayor Tom Barrett with a slight lead over Walker:

   PPP’s final poll on the Wisconsin recall finds Scott Walker ahead, but also a race that’s tightening. Walker leads Tom Barrett 50-47. That’s down from 50-45 on a PPP poll conducted three weeks ago and it’s also down from a 52-45 lead that Walker posted in a Marquette Law poll released last week.

   Barrett is actually winning independent voters by a 48-46 margin. The reason he continues to trail overall is that Republicans are more excited about voting in Tuesday’s election than Democrats are. Our projected electorate voted for Barack Obama by only 7 points, even though he took the state by 14 in 2008. If the folks who turn out on Tuesday actually matched the 2008 electorate, Barrett would be ahead of Walker by a 50-49 margin. It’s cliche but this is a race that really is going to completely come down to turnout.

This week’s Up with Chris Hayes devoted its first segments to what is at stake for not only Wisconsin but the rest of the country.

Up with Chris Hayes panelists Michael Steele, former chairman of the Republican National Committee; Randi Weingarten, president of the American Federation of Teachers; Michelle Bernard, founder, president and CEO of The Bernard Center for Women, Politics and Public Policy; and Bob Herbert, former New York Times columnist and now a distinguished senior fellow at the progressive think tank Demos, discuss the ferocious recall election in Wisconsin, and its implications for national politics.

John Nichols, Washington correspondent for The Nation, joins thepanel to talk about the tidal wave of dark money flowing in from special interests in the Wisconsin recall election.

“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”.

Follow us on Twitter @StarsHollowGzt

Paul Krugman: This Republican Economy

What should be done about the economy? Republicans claim to have the answer: slash spending and cut taxes. What they hope voters won’t notice is that that’s precisely the policy we’ve been following the past couple of years. Never mind the Democrat in the White House; for all practical purposes, this is already the economic policy of Republican dreams.

So the Republican electoral strategy is, in effect, a gigantic con game: it depends on convincing voters that the bad economy is the result of big-spending policies that President Obama hasn’t followed (in large part because the G.O.P. wouldn’t let him), and that our woes can be cured by pursuing more of the same policies that have already failed.

For some reason, however, neither the press nor Mr. Obama’s political team has done a very good job of exposing the con.

(emphasis mine)

New York Times Editorial: Whose Welfare?

Every week the campaign dollars pile up, by the tens of millions, by the hundreds of millions, to a level never before seen in American political life. Outside groups now say they plan to spend $1 billion on behalf of Republicans in the November election, which will probably be twice the level raised by groups supporting Democrats. Even the slush-funders of the Watergate era would have been slack-jawed at the number of seven- and eight-figure checks pouring into groups with names like Crossroads and Americans for Prosperity.

The reason for these staggering numbers – and for the growing imbalance between the parties – is that the vast financial power of the business world has been loosed as a political tool by the federal courts. In pursuit of lower taxes and less regulation, businesses, led by the United States Chamber of Commerce, are determined to remove President Obama from office and return full control of Congress to the Republican Party. Executives and companies are the principal source of the unlimited checks that are fueling the rise of these outside groups.

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

June 4 is the 155th day of the year (156th in leap years) in the Gregorian calendar. There are 210 days remaining until the end of the year.

On this day in 1919, the 19th Amendment to the U.S. Constitution, guaranteeing women the right to vote, is passed by Congress and sent to the states for ratification.

The Nineteenth Amendment‘s text was drafted by Susan B. Anthony with the assistance of Elizabeth Cady Stanton. The proposed amendment was first introduced in the U.S. Senate colloquially as the “Anthony Amendment”, by Senator Aaron A. Sargent of California. Sargent, who had met and befriended Anthony on a train ride in 1872, was a dedicated women’s suffrage advocate. He had frequently attempted to insert women’s suffrage provisions into unrelated bills, but did not formally introduce a constitutional amendment until January 1878. Stanton and other women testified before the Senate in support of the amendment. The proposal sat in a committee until it was considered by the full Senate and rejected in a 16 to 34 vote in 1887.

A three-decade period known as “the doldrums” followed, during which the amendment was not considered by Congress and the women’s suffrage movement achieved few victories. During this period, the suffragists pressed for the right to vote in the laws of individual states and territories while retaining the goal of federal recognition. A flurry of activity began in 1910 and 1911 with surprise successes in Washington and California. Over the next few years, most western states passed legislation or voter referenda enacting full or partial suffrage for women. These successes were linked to the 1912 election, which saw the rise of the Progressive and Socialist parties, as well as the election of Democratic President Woodrow Wilson. Not until 1914 was the constitutional amendment again considered by the Senate, where it was again rejected.

On January 12, 1915, a proposal to amend the Constitution to provide for women’s suffrage was brought before the House of Representatives, but was defeated by a vote of 204 to 174. Another proposal was brought before the House on January 10, 1918. During the previous evening, President Wilson made a strong and widely published appeal to the House to pass the amendment. It was passed by the required two-thirds of the House, with only one vote to spare. The vote was then carried into the Senate. Wilson again made an appeal, but on September 30, 1918, the proposal fell two votes short of passage. On February 10, 1919, it was again voted upon and failed by only one vote.

There was considerable desire among politicians of both parties to have the proposal made part of the Constitution before the 1920 general elections, so the President called a special session of the Congress so the proposal would be brought before the House again. On May 21, 1919, it passed the House, 42 votes more than necessary being obtained. On June 4, 1919, it was brought before the Senate and, after a long discussion, it was passed with 56 ayes and 25 nays. Within a few days, Illinois, Wisconsin, and Michigan ratified the amendment, their legislatures being in session. Other states followed suit at a regular pace, until the amendment had been ratified by 35 of the necessary 36 state legislatures. On August 18, 1920, Tennessee narrowly approved the Nineteenth Amendment, with 50 of 99 members of the Tennessee House of Representatives voting yes. This provided the final ratification necessary to enact the amendment.

‘Tis the time of the season here in the Bluegrass for fireflies (or, as we used to call them at home in Arkansas, lightening bugs).  Fireflies are an amazingly large group of insects, and are found on all continents except Antarctica.

The experts still can not agree how to categorize them systematically, so we will just touch on their classification.  It is important, however, to place them within the insects at least to a zero order approximation.

I got to thinking about them the other night when my dear friend and her little girl were in their yard next door trying to catch the few that were already flying.  Next week it is supposed to be warmer, so the three of us may be able to spend some quality time together catching them, and letting them go, of course, after The Little Girl goes to bed.

The remainder of the title would not fit: “The destruction of language in politics”.  The series this is a part of has the labels:Anti-capitalist meet-up and anti-capitalism.  No better a way to introduce my topic.  Those are “buzz words” and have been around for a very long time.  What do they mean?  I would guess that the vast majority of the people who use these words along with “communism”, “socialism”, “democracy” , “freedom”, liberty”and many others have no real idea what they are talking about.  Political exchanges are the “good guys” and the “bad guys” just like in our Western movies.  But many of us are more sophisticated or at least we think we are.  Read the diaries here and you will be able to see what I am getting at.  Language is a very interesting thing.  We have dictionaries and now the Google and Wikipedia sources for word meanings.  The technology is racing ahead faster than we can comprehend.  Umberto Eco calls it the modern magic.  We use it like magic not really knowing how it works or where it originates.  This diary is meant to blow your mind.  It comes from the strange creature I am, a hybrid between scientist (but very unconventional), political activist (but very radical and unconventional) and citizen of the world rather than of a Nation.  Oh yes I am an American citizen because that’s the way things have to be at this point in time.  It will change, but I will be dead.  When I die I cease to exist. I am 76 now.  If I haven’t turned you off yet read on below.  I hope to shock you.