Posted inUncategorized

Yet another financial swindle sneaks into the ‘rescue’

So what did Americans really get when Congress approved a bill giving the Treasury power to spend some $700 billion to stem the financial panic? It's becoming clear that Treasury Secretary Hank Paulson has mishandled the crisis in typical Bushian fashion. First with incompetence, by allowing the investment banking sector he came from to march over the edge of the abyss over the past year, long after it the cataclysmic risks to the system were clear. Then, in mad improvisation, he allowed Lehman to fail. He refused congressional suggestions of a direct capital infusion into the banks — until it was clear it "buy toxic debt" scheme wasn't working and Britain and the EU led the way with direct infusions. Brownie, call your office.

Also typically Bushian was the stampede to act, on a bailout plan with no oversight that would have given Paulson unprecedented power. Iraq, anyone. Congress made some oversight improvements, and Obama has made it clear he will alter the "rescue" further if he wins the White House. But everybody had a gun to his or her head to "do something" as the markets collapsed.

Of course, we're not dealing with drowning poor, black folks in NOLA, here. So ultimately, the administration was willing to take any "socialist" action to save its wealthy friends in the investment banks, the hedge funds, etc. So maybe the Brownie analogy is not quite right. Yet we should be on guard. Remember another hallmark of Bush governance: enriching the politically connected and powerful through privatization. How could that happen in the "financial rescue"?

Now it's becoming clear

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Posted inUncategorized

The danger to the economy: Size does matter

One of the biggest underlying problems behind the financial crisis is size. These are the wages of years of mergers and industry consolidation, combined with weak or non-existent regulation. Thus, Wachovia today posted a loss of $8.9 billion — enough to add to the public funding of Amtrak by nearly eight-fold. In a healthy market economy, a bank with such performance could simply be allowed to "fail," with depositors covered by the FDIC and the shareholders who enabled the disaster taking the fall.

But Wachovia is too big to fail. Like its cousin investment banks on Wall Street and Freddie Mac and Fannie Mae, its collapse could bring down the entire economy. If necessary it will be propped up, as the Fed and Treasury have done with those other giants. (The immediate damage: $25 billion). That’s your money. Of course, the executive class will continue to take home tens-of-millions paychecks as a reward for these disasters.

And yet, the brain surgeons in the executive suites of Wachovia are merely trying to fix the bank enough to sell it. Jamie Dimon’s JPMorgan Chase seems to be the last shopper standing at the garage sale of the American economy. The result, in addition to calamity in Wachovia’s hometown of Charlotte, will be an even bigger behemoth to hold taxpayers hostage next time.

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Who mourns for Dayton?
Posted inPolitics: National

Who mourns for Dayton?

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When I moved to Dayton, Ohio, in 1986, it was the first time I lived in a real city. It was far smaller than Phoenix or San Diego, the then sleepy but populous places I'd been, but it seemed bigger. I lived in a leafy city neighborhood of old houses and took the bus to work. The downtown was a compact mass of skyscrapers held in a bend of the Great Miami River. The newspaper was there, in a lovely old building enchanted by history, with a newspaper bar right next door and a bustling historic domed arcade across the street. Two department stores were a block away. Across the square was the old courthouse where Lincoln had spoken. Nearby, a jazz club.

The economy was robust. The "Rust Belt" was reinventing itself as an innovative superpower and Dayton was no exception. While National Cash Register had shut manufacturing of the old machines — a trauma affecting thousands — it had become a successful global computer giant. Mead, the paper company, was headquartered in a downtown tower and starting a data operation that became LexisNexis. Dayton had the second largest concentration of General Motors employees in the world, and its factories were being retooled and reinvented, often with UAW bosses as leading innovators. Hundreds of suppliers provided well-paid, high-skilled jobs that were as productive as any in the world. The airport hosted an airline passenger hub for the best-run carrier in America, Piedmont, as well as a freight hub for Emery Worldwide. For a kid from the West, this introduction to the Midwest was a heartland epiphany.

Those assets are almost all gone now. And when I wonder why Ohio seems so crazy — how it could have voted for Bush in 2004, if indeed it did; why it fell for Hillary's Wellesley girl Norma Jean routine; why it could now be a tossup for McCain (?!). When I wonder all these things, I think about Dayton.

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