12/21/2012 archive

“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.

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New York Times Editorial: Another Questionable Bank Settlement

The Department of Justice would like you to believe it has finally gotten tough with a too-big-to-fail bank. As part of the global investigation into interest-rate-rigging at the world’s biggest banks, it has extracted a guilty plea for felony wire fraud from UBS Securities Japan, a subsidiary of UBS, the Swiss bank. [..]

Seen in that light, a subsidiary’s plea on a single criminal charge appears to shield the parent company and the prosecution of two traders appears to shield their managers. And even though a $1.5 billion penalty is large by historical standards, there is little reason to believe that such fines, disconnected from criminal charges against bank officers, will deter future wrongdoing.

The Justice Department referred to the UBS rate-rigging as an “epic” scandal. But, as yet, there has been nothing epic in the department’s response.

Paul Krugman: Playing Taxes Hold ‘Em

A few years back, there was a boom in poker television – shows in which you got to watch the betting and bluffing of expert card players. Since then, however, viewers seem to have lost interest. But I have a suggestion: Instead of featuring poker experts, why not have a show featuring poker incompetents – people who fold when they have a strong hand or don’t know how to quit while they’re ahead?

On second thought, that show already exists. It’s called budget negotiations, and it’s now in its second episode. [..]

As in 2011, then, the Republican crazies are doing Mr. Obama a favor, heading off any temptation he may have felt to give away the store in pursuit of bipartisan dreams.

And there’s a broader lesson here. This is no time for a Grand Bargain, because the Republican Party, as now constituted, is just not an entity with which the president can make a serious deal. If we’re going to get a grip on our nation’s problems – of which the budget deficit is a minor part – the power of the G.O.P.’s extremists, and their willingness to hold the economy hostage if they don’t get their way, needs to be broken. And somehow I don’t think that’s going to happen in the next few days.

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.

December 21 is the 355th day of the year (356th in leap years) in the Gregorian calendar. There are 10 days remaining until the end of the year. This is a frequent day for the winter solstice to occur in the northern hemisphere and summer solstice to occur in the southern hemisphere.

On this day in 1968, Apollo 8, the first manned mission to the moon, is successfully launched from Cape Canaveral, Florida, with astronauts Frank Borman, James Lovell, Jr., and William Anders aboard.

Apollo 8 was the first human spaceflight to leave Earth orbit; the first to be captured by and escape from the gravitational field of another celestial body; and the first crewed voyage to return to planet Earth from another celestial body-Earth’s Moon. The three-man American crew of mission Commander Frank Borman, Command Module Pilot James Lovell, and Lunar Module Pilot William Anders became the first humans to directly see the far side of the Moon, as well as the first humans to see planet Earth from beyond low Earth orbit. The 1968 mission was accomplished with the first manned launch of a Saturn V rocket. Apollo 8 was the second manned mission of the Apollo program and the first manned launch from the John F. Kennedy Space Center.

Originally planned as a second Lunar Module/Command Module test in an elliptical medium Earth orbit in early 1969, the mission profile was changed in August 1968 to a more ambitious Command Module-only lunar orbital flight to be flown in December, because the Lunar Module was not ready to make its first flight then. This meant Borman’s crew was scheduled to fly two to three months sooner than originally planned, leaving them a shorter time for training and preparation, thus placing more demands than usual on their time and discipline.

After launching on December 21, 1968, Apollo 8 took three days to travel to the Moon. It orbited ten times over the course of 20 hours, during which the crew made a Christmas Eve television broadcast in which they read the first 10 verses from the Book of Genesis. At the time, the broadcast was the most watched TV program ever. Apollo 8’s successful mission paved the way for Apollo 11 to fulfill U.S. President John F. Kennedy’s goal of landing a man on the Moon before the end of the decade.

As we enter this joyous season let us remember that austerity means stealing from the poor and the middle class so that the richest become relatively richer by comparison even though their absolute standard of living declines.

Because how can you tell who’s the King if everyone else isn’t covered in shit?

Let’s Celebrate the Failure of the July 2011 Great Betrayal

Bill Black, Nacked Capitalism

Friday, December 21, 2012

On the First Try At Austerity, here’s what Obama did-

In July 2011, President Obama and Speaker Boehner reached an agreement in principle on a deal crafted to inflict $4 trillion in austerity by raising taxes modestly, slashing social spending, and beginning to unravel the safety net. The deal would have been a disaster for America. Unemployment was 9.1%. The deal would have thrown us back into a recession and caused unemployment to surge. Recessions and increased unemployment cause tax revenues to fall and increase demand for social services (e.g., for unemployment compensation) – they produce large deficits. Austerity kills jobs and frequently increases deficits. The Eurozone is the latest demonstration of this fact.

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Obama is the person in the world who benefitted most from the failure of the July 2011 austerity deal he reached in principle with Boehner. If the austerity deal had been finalized the nation would have be forced back into recession. Unemployment was 9.1% in July 2011. It would have risen sharply above 10% and it would have gone up every month in 2012 as the election approached. Obama would have been crushed by Governor Romney. The irony is that Obama tried five times in 2011 to inflict austerity on America. Had he succeeded, he would have caused grave damage to our nation. Had he succeeded in inflicting austerity he would have also destroyed his re-election chances, given the Republicans control of the U.S. Senate, slashed public services when they were most needed, and begun the process of destroying the safety net. He would have gone down in history as a grotesque failure.

On the Second Try At Austerity, here’s what Obama did-

Obama’s second effort to inflict austerity was the creation of the “fiscal cliff” austerity deal in August 2011. The premise of the August deal was that austerity needed to be inflicted on America.

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(T)hese statements by Obama strike many Americans as sensible, but they betray a basic misunderstanding of economics and explain why he embraces austerity. We are a nation with a sovereign currency. Our national government is nothing like a household. “Balancing the budget” (“live within our means”) in response to the Great Recession is austerity. Austerity is a disastrous policy in such circumstances because it causes nations to fall back into recession or depression.

The issue is not “fair[ness]” through joint sacrifice. If “everyone” “chip[s] in” through austerity it still produces a gratuitous recession or depression. That is not “fair” – it is insane – there is no such thing as a “fair” recession. “Fighting” for “fair” austerity so that everyone suffers equally through a “fair” recession is impossible because recessions cause increased unemployment, which is inherently unfair. But the more essential point is that it is insane to cause recessions through austerity.

On the Third Try At Austerity, here’s what Obama did-

Obama’s stated policy was to cut federal spending in 2011, but not “too abruptly.” Cutting overall spending in response to a Great Recession causes gratuitous recessions, even if you make “key investments.”

Obama intended the prospect of the fiscal cliff’s dramatic mandatory cuts in social programs to extort progressive Congressional Democrats into agreeing to inflict severe austerity by voting in favor of what Obama hoped would be massive cuts in social programs and the safety net adopted by the Congressional “super committee” created by the same bipartisan austerity deal that created the “fiscal cliff.” Obama encouraged the “super committee” to inflict massive spending cuts and tax increases (super-sized austerity).

On the Fourth Try At Austerity, here’s what Obama did-

Obama’s fourth effort occurred during the super committee negotiations. Some members of Congress opposed the imposition of the “fiscal cliff” austerity provisions and sought to remove, delay, or reduce them. Obama intervened to block any effort to avoid or reduce the austerity inflicted by the “fiscal cliff.”

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Yes, President Obama “urged” the infliction of severe austerity through cuts in the safety net, massive cuts in social programs, and deliberately created and used the “fiscal cliff’s” self-destructive austerity threat to extort these betrayals of the American people. His surrogates (Erskine Bowles and Alan Simpson – the co-chairs of Obama’s austerity commission) pushed the “super committee” to “go big” and inflict $4 trillion in austerity. (Simpson predicted that the markets would “tank” absent such an austerity deal.)

Obama urged austerity under the “logic” that a national government with a sovereign currency is “just” like a household – the most basic and common economic error in this field. The President of the United States thinks that the U.S. government is “just” like a household and should try to balance the budget (“live within our means”) through austerity in response to the Great Recession. He also thinks we should seize the political opportunity, even if it had nothing to do with the budget deficit, to begin to unravel the safety net. It is this sad record that led me (and many others) to warn before the election that Obama’s effort to secure a “Grand Bargain” constituted a “Great Betrayal” motivated by his desire to create his legacy. Obama’s self-portrait is that he was willing to agree to sacrifice his Party’s greatest accomplishments (the safety net) in order to secure a bipartisan agreement imposing austerity. The actual sacrifices, however, will be made by the elderly, the poor, and the working class, the victims of his betrayal. If Obama succeeds in producing another recession through austerity you can add the nation to the list of sacrificial victims.

On the Fifth Try At Austerity, here’s what Obama did-

When the super committee failed to reach a bipartisan austerity deal in November 2011, members of Congress sought to pass legislation removing the fiscal cliff’s austerity provisions. Obama’s fifth effort to inflict austerity occurred when he threatened to veto any reduction in fiscal cliff austerity.

And a Partridge in a Pear Tree-

Fortunately for the nation (and Obama), fate conspired to cause four of Obama’s efforts to inflict austerity to fail while the fifth (the “fiscal cliff”) does not begin to kick in until 2013. For opposite reasons, the Tea Party and progressive Democrats have interacted in a manner that blocked Obama’s efforts to inflict austerity on the nation. (The Tea Party loves austerity, but hates even modest tax increases for the wealthy.)

Obama was not an outlier in repeatedly seeking to inflict austerity on the nation in 2011: “about 100 members of Congress from both parties are urging the [super committee] to go big on the reductions, to the tune of $4 trillion.”

The general media did not warn about the insanity of inflicting the “fiscal cliff” austerity program on the nation. Instead, it fed the hysteria about the deficit and urged even greater austerity. The New York Times exemplifies the general response. The title of their article about the August 2011 austerity deal that created the “fiscal cliff” set the pro-austerity tone.

The thrust of the article was that the proponents of the August 2011 bipartisan austerity deal had to defend it against charges that it imposed too little austerity. The article also claimed that while economists were divided on the issue, most economists favored austerity. Our national debt was about to cause interest rates to surge, causing a disastrous feedback loop.

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All of this was economically illiterate. Interest rates fell, as my colleagues and economists like Paul Krugman predicted. Inflicting austerity in response to a Great Recession is a superb strategy for increasing unemployment, the deficit, inequality, and debt because it reduces already inadequate private and public sector demand and causes recessions and depressions. Even the modest stimulus policy the U.S. followed despite Obama’s and Boehner’s best efforts to inflict austerity, proved vastly superior to the Eurozone’s austerity policy that forced the Eurozone into recession and much of the periphery into Great Depression levels of unemployment. The U.S. budget deficit has fallen at the fastest rate in modern history due to the success of even the greatly inadequate stimulus program that Obama adopted before he turned against stimulus under Geithner and Daley’s influence. America’s problem is jobs, not the deficit.

Beware of anyone who uses phrases like “down payment” when it comes to the federal deficit for they have no meaning and are designed to mislead. Reducing social spending in response to the Great Recession is austerity – not a “down payment on … deficit reduction.” Indeed, it is likely to increase the deficit by causing a recession.

Gifts in ‘The Twelve Days of Christmas’ Cost $107,000 This Year, Thanks to Rising Feed Prices

By Nick Carbone, Time Magazine

Nov. 26, 2012

According to PNC, the past year’s underlying inflation of about two percent was only part of the price hike. The largest increase among the “12 Days” gifts was for the six geese a-laying, the price of which shot up 29.6% over the past year due to high feed costs prompted by this summer’s Midwest drought. The price of gold also rose, making those golden rings pricier; meanwhile the market for those seven swans a-swimming is considered by PNC to be “most volatile.”

In the light of the Sandy Hook tragedy, stricter gun regulation should be a no brainer. Apparently there are still many who are willing to place the blame on anything but the easy access to an semi-automatic assault rifle with multi-round clips. In the Los Angeles Times, Larry Alan Burns, a federal district judge in San Diego, who recently sentenced Jared Lee Loughner to seven consecutive life terms plus 140 years in federal prison for his shooting rampage in Tucson, makes the case for new gun control legislation.

Burns is a self-described conservative, appointed to the bench by President George W. Bush, and he agrees with the Supreme Court’s decision in District of Columbia vs. Heller, which held that the 2nd Amendment gives Americans the right to own guns for self-defense. He is also a gun owner.

But while sentencing Loughner in November, Burns questioned the need for high-capacity magazines like the one Loughner had in his Glock, and said he regretted how the Federal Assault Weapons Ban was allowed to lapse in 2004. On Thursday, reacting to last week’s mass shooting in Newtown, Conn., Burns publicly called for a new assault weapons ban “with some teeth this time,” in an op-ed published by The Los Angeles Times.

Lawrence O’Donnell reads Judge Burns’ op-ed in its entirety.