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With job growth failing to exceed population growth each month, and with no serious increase in the percent of Americans working, 2011 was a lost year for the economy.
Lost years for the economy have major consequences. Beyond the human misery that results, they put the entire project of liberal governance at risk. Choices made early by this administration resulted in no advancement on three fronts... fiscal policy... monetary policy... and dealing with the problems in the housing market....
In the 2010 State of the Union, President Obama stated that he would freeze 2011 discretionary spending even though unemployment was projected to be above 8 percent... This conventional wisdom gave the Republicans the leverage they needed to destroy any pro-active economic agenda.
Thus the Democrats spent 2011 -- which could have been a crucial year for the recovery -- in a futile debate with the Republicans over the budget. From the original government shutdown in April to the debt ceiling fights in July, Republicans showed that they were capable of making even the most trivial changes to the budget costly to the Democrats. As time went on the administration became ever more willing to make huge concessions to get a deal and restart the economy, and each time was left at the table....
Monetary policy is another avenue that spent 2011 in limbo... In the midst of collapsing prices, President Franklin Roosevelt in a fireside chat in 1933 announced that "[i]t is the Government's policy to restore the price level first"-- a signal to the markets that the New Deal was going to take monetary policy very seriously. President Obama has shown less interest in monetary policy, reappointing the moderate Republican Ben Bernanke to office and leaving [Fed board] seats open for years.... Obama's lack of movement on recess appointments has left the Fed tilted to the right. Since the other people that sit on the Federal Reserve are hard conservatives appointed by banks, getting people concerned about unemployment there is even more important.
At the end of 2011, key liberals... started talking about a new way of doing Federal Reserve policy based on "nominal GDP targeting" which would allow for higher inflation in weak economic times. Meanwhile, Chicago Federal Reserve President Charles Evans put out a plan to allow 3 percent inflation while unemployment is above 7 percent. These are good ideas; the administration could put them into practice by filling vacancies with appointees who understand their value.
The third important element of the recovery is restoring the housing sector... Foreclosures are a lose-lose-lose, devastating homeowners and neighborhoods, ravaging municipality budgets and hitting the creditors themselves... The most obvious way to deal with this is to allow courts to write down mortgage debt in bankruptcy, but the Obama administration passed on requiring bankruptcy modifications...
Ever since then, abuses in the mortgage payment "servicing" system-ranging from robo-signing to phantom foreclosure referrals to illegal foreclosures on servicemen overseas-have been reported by both community activists and from financial analysts. In late 2010, the largest banks voluntarily halted foreclosures to investigate before going back to business as normal.
The administration could have pushed hard on investigating the foreclosure market. Instead they pushed for quick settlement with the largest banks...
In 1938, shortly after premature fiscal and monetary tightening triggered a recession, the economist John Manyard Keynes wrote a worried letter to President Roosevelt. He was, he wrote, "terrified lest progressive causes in all the democratic countries should suffer injury, because you have taken too lightly the risk to their prestige which would result from a failure measured in terms of immediate prosperity. There need be no failure. But the maintenance of prosperity in the modern world is extremely difficult; and it is so easy to lose precious time."
Everything progressives have fought for -- from the policy advancements of the Obama administration like healthcare and financial reform to the New Deal and Great Society programs that remain, like Social Security and Medicare -- has been at risk as a result of this Great Recession. A longer period of sustained joblessness will wreck the working class and devastate the budget, leaving our economy even weaker.... There are ways forward; it is just a question of whether the administration is prepared to take them. It is easy to lose precious time, and we've just lost a full year with nothing to show for it.
Since 1980, the share of the nation's income for fat cats like me... has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the superwealthy fell to 16.6 percent in 2007... In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.
One reason this policy is so wrong-headed is that there can never be enough super-rich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don't buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.
If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.
The now-viral video of police officers in their Robocop costumes sadistically pepper-spraying peaceful, sitting protesters at UC-Davis shows a police state in its pure form. It's easy to be outraged by this incident as though it's some sort of shocking aberration, but that is exactly what it is not...
There are several points to note about this incident and what it reflects:
(1) Despite all the rights... guaranteed by the U.S. Constitution, the reality is that punishing the exercise of those rights with police force and state violence has been the reflexive response in America for quite some time...
The intent and effect of such abuse is that it renders those guaranteed freedoms meaningless. If a population becomes bullied or intimidated out of exercising rights offered on paper, those rights effectively cease to exist. Every time the citizenry watches peaceful protesters getting pepper-sprayed -- or hears that an Occupy protester suffered brain damage and almost died after being shot in the skull with a rubber bullet... they become fearful... of exercising their rights in a way that is... threatening to those in power. That's a natural response, and it's exactly what fear imposed by all abusive police state actions is intended to achieve...
Implanting fear of authorities in the heart of the citizenry is a far more effective means of tyranny than overtly denying rights.... Overzealous prosecution of those who engage in peaceful political protest... are all about deterring meaningful challenges to those in power... Rights are so much more effectively destroyed by bullying a citizenry out of wanting to exercise them than any other means.
(2) Although excessive police force has long been a reflexive response to American political protests, two developments in the post-9/11 world have exacerbated this.
The first is that the U.S. Government -- in the name of Terrorism -- has aggressively para-militarized the nation's domestic police forces...
The second exacerbating development is more subtle but more important: the authoritarian mentality that has been nourished in the name of Terrorism. It's a very small step to go from supporting the abuse of defenseless detainees (including one's fellow citizens) to supporting the pepper-spraying and tasering of non-violent political protesters.
(3) Beyond the light it is shedding on how power is really exercised... this UC-Davis episode underscores why... the Occupy movement is one of the most exciting, inspiring and important political developments in many years. What's most striking about that UC-Davis video isn't the depraved casualness of the officer's dousing the protesters' faces with a chemical agent; it's how most of the protesters resolutely sat in place and refused to move even when that happened... We've repeatedly seen acts of similar courage spawned by the Occupy movement.
It was the NYPD's abusive pepper-spraying, followed by Mayor Bloomberg's lawless destruction of the Zuccotti Park encampment, that prompted far more people than ever to participate in the next march across the Brooklyn Bridge. A tear gas attack on Occupy Oakland was followed by a general strike of 20,000 people. And this truly extraordinary, blunt and piercing open letter demanding the resignation of the heinous UC-Davis Chancellor Linda P.B. Katehi was written by a young, untenured Assistant Professor -- Nathan Brown -- who obviously decided that his principled beliefs outweigh his careerist ambitions.
This is the most important effect of the Occupy movement: acts of defiance, courage and conscience are contagious.... The protest movement is driving the proliferation of new forms of activism, citizen passion and courage, and -- most important of all -- a sense of possibility...
The bipartisan Super Committee trying to forge a politically acceptable path for deficit reduction ended in a super fail, and one of the big reasons... is disagreement over the extension of the Bush tax cuts for high income households.
[Democrats]... argue that the present tax structure places too little burden on the wealthy and too much on the middle and lower classes, and therefore the expiration of the Bush tax cuts... would make taxes more progressive and more equitable without endangering the recovery. Allowing the cuts to expire would also provide $800 billion in revenue over the next ten years and this would help preserve important social programs.
The failure... to come to agreement on the Bush tax cuts does not end the battle... If Congress does nothing... the two percent payroll tax cut [will] expire in December, and extended jobless assistance [will] also [expire].
I don't expect Republicans to put the unemployed at the forefront of their policy agenda. It comes as no surprise that they would insist on tax cuts for the wealthy despite their purported concern for the deficit, and then sing a different tune for the working class...
But I do expect Democrats to be the champions of the poor, the underprivileged, and the unemployed. When... did the need for deficit reduction... come to be more important than the needs of households struggling with the recession? Why aren't Democrats talking about the need to help the unemployed at every possible opportunity? Where's the Super Committee for Job Creation?
President Obama and many Democratic members of Congress have endorsed the idea that budget deficits are biggest threat we face... and this has helped to convince the public that the national debt is our biggest concern, and that we simply do not have the resources to.. help with job creation.
The main cause of our present deficit is a combination of the recession, the Bush tax cuts, and wars, and those three items will continue to be the main source of deficits in the near future. But Democrats have allowed Republicans to portray the problem as out of control spending on social programs that require super special commissions to resolve immediately, and it will be difficult to change that perception now....
But it's important that Democrats at least try since any success at all would make a huge difference to the unemployed... I would like to see Democrats adopt a tougher stance on the need for higher income households to pay more in taxes so that important social programs can be preserved. But right now our main problem is the unemployment crisis.
In the Savings and Loan crisis, which was 1/70th the size of this crisis, our agency made over 10,000 criminal referrals, and that resulted in the conviction on felony grounds of over 1,000 elites in what were designated as major cases...
... Epidemics of fraud [are] led from the C-Suite, from the CEOs and CFOs... in the Enron era, [there were] always frauds from the very top of the organization, and in this crisis, the frauds came from the top of the organization again.
But what's different in this crisis? In this crisis, the same agency that I worked with, that made over 10,000 criminal referrals, in a tinier crisis, made zero criminal referrals. They got rid of the entire function. And so there are zero convictions of anybody in the elite ranks of Wall Street.
And if they can defraud us with impunity then they will cause crisis after crisis and they will produce maximum inequality. The group that has the audacity to refer to itself as the "productive class" is the largest destroyer of lives, of jobs and of wealth of any group ever produced in this world.
They wiped out six million existing jobs and five-to-six million jobs that would have been created. As you've heard they've left 26 million Americans wanting full-time work with no ability to find that work...
And then they had the nerve to say [that] they are "the productive class"... [but] they are mass destroyers of jobs...
Everybody opposed our re-regulation of the [financial] industry. The big deregulation bill... occurred in 1982, and became effective in 1983... but by November of 1983 we were [trying to re-regulate] the Savings and Loan industry, and we were called re-regulators because that was the greatest swear-word the Reagan Administration believed existed; to call people "re-regulators". But [opposition to re-regulating] was not partisan, a majority of the members of the [Democratically-controlled] House... co-sponsored a resolution saying, "do not... re-regulate"...
The Reagan Administration was so outraged that we were closing insolvent S&L's with great political support, that the OMB threatened to file a criminal referral against the head of our agency on the grounds that he was closing too many insolvent banks. Have we had that problem recently? Do you see Geithner out trying to close the big, powerful banks?
We can prosecute these frauds... the Federal Housing Finance Administration (FHFA) has just filed complaints saying seventeen of the largest banks in America committed massive fraud, endemic fraud, and that there is a paper trail proving that they did so.
So where is the justice department? Why is it not indicting these clear frauds?
... Remember, it is the lenders who put the "lies" in "liars loans", not the borrowers. We know this empirically. And we stopped that [in 1982] because, [as regulators] that was insane. So guess what happened, the leading folks making liars loans gave up their federal charter; gave up federal deposit insurance and became a mortgage bank, for the sole purpose of escaping regulation.
And they changed their name... to Ameriquest... the leading predatory lender that, in addition to making liars loans, every day, every day of the week, targeted minorities, to destroy [minorities'] wealth... they targeted latinos, they targeted blacks, and they were caught three times doing this, and the justice department refused to prosecute, instead [Ameriquest] settled for $400 million, [but] guess what happened to the head of Ameriquest? ... we [made] him our ambassador to the Netherlands.
Why do you think we made him our ambassador to the Netherlands? Because he was the leading political contributor to the President of the United States of America.
And that's bad, but what comes next is far worse, remember [that Ameriquest] is the most notorious fraud in the nation. [It is a company that] targets minorities, [and] everybody knows it does so, [but] two entities rush to acquire [Ameriquest's] personnel and business, and their names? Citicorp, and Washington Mutual, who become two of the most notorious frauds in [the subprime crisis]...
When we prosecuted [in the S&L crisis] we had a 90% conviction rate, [even] when [the defendants] had the best criminal defense lawyers in the world, and they spent money like water to protect the CEO from going to prison. So when they tell you, "no one can stop this", it is utter nonsense.
[I] will leave you with these statistics: The FBI warned of this in September of 2004, in open testimony. It warned, expressly, that there was an... epidemic of mortgage fraud, and it predicted it would cause a financial crisis.
If that's not enough, the [mortgage] industry's own anti-fraud experts, in 2006, in writing, went to every mortgage banker in America... and said three things:
1.) "Stated income loans" are an open invitation to fraudsters
2.) The incidence of fraud in [stated income loans] is 90%
3.) These loans are deserve the phrase... "liars loans" because they are pervasively fraudulent
What did the industry do after it was warned? Did it stop making these loans? No. It massively increased the amount of these loans such that by 2006, one out of every three home loan in America was a "liar's loan" and that's why we have a crisis. And it came from the very top of these organizations, and it went through, as the FHFA said in its complaint, the largest banks in the world, [which] were endemically fraudulent.
It is not a few rotten apples, it is an orchard of one-percenters who are rotten to the core.
I have a confession to make. At first, I misunderstood Occupy Wall Street.... my initial impression was that it would not be taken very seriously.... [M]odern finance is a giant mechanical parasite that only an expert surgeon can remove. Yell and scream all you want, but [Blankfein] and his fellow financial Frankensteins are the only ones who know how to turn the machine off.
That's what I was thinking during the first few weeks of the protests. But I'm beginning to see another angle. Occupy Wall Street... [is] about providing a forum for people to show how tired they are not just of Wall Street, but everything. This is a visceral, impassioned, deep-seated rejection of the entire direction of our society...
We're all born wanting the freedom to imagine a better and more beautiful future. But modern America has become a place so drearily confining and predictable that it chokes the life out of that built-in desire.
There's no better symbol of the gloom and psychological repression of modern America than the banking system, a huge heartless machine that attaches itself to you at an early age, and from which there is no escape... This is why people hate Wall Street. They hate it because the banks have made life for ordinary people a vicious tightrope act; you slip anywhere along the way, it's 10,000 feet down into a vat of razor blades that you can never climb out of.
That, to me, is what Occupy Wall Street is addressing. People don't know exactly what they want, but as one friend of mine put it, they know one thing: FUCK THIS SHIT! We want something different: a different life, with different values, or at least a chance at different values.
And here's one more thing I was wrong about: I originally was very uncomfortable with the way the protesters were focusing on the NYPD as symbols of the system. After all, I thought, these are just working-class guys from the Bronx and Staten Island...
But I was wrong. The police in their own way are symbols of the problem. All over the country, thousands of armed cops have been deployed to stand around and surveil and even assault the polite crowds of Occupy protesters. This deployment of law-enforcement already dwarfs the amount of manpower that the government "committed" to fighting crime and corruption during the financial crisis. One OWS protester steps in the wrong place, and she immediately has police roping her off like wayward cattle. But in the skyscrapers above the protests, anything goes.
This is a profound statement about who law enforcement works for in this country.... There have already been hundreds of [Occupy] arrests, which is hundreds more than we ever saw during the years when Wall Street bankers were stealing billions of dollars from retirees and mutual-fund holders and carpenters unions through the mass sales of fraudulent mortgage-backed securities.
It's not that the cops outside the protests are doing wrong, per se, by patrolling the parks and sidewalks. It's that they should be somewhere else. They should be heading up into those skyscrapers and going through the filing cabinets to figure out who stole what, and from whom. They should be helping people get their money back. Instead, they're out on the street, helping the Blankfeins of the world...
People want out of this fiendish system, rigged to inexorably circumvent every hope we have for a more balanced world. They want major changes. I think I understand now that this is what the Occupy movement is all about.... Eventually it will need to be specific about how it wants to change the world. But for right now, it just needs to grow... It doesn't need to tell the world what it wants. It is succeeding, for now, just by being something different.
"We cannot with moral conscience borrow trillions of dollars that can only be repaid by our children."
Reckless borrowing, with the invoice passed to our children – nobody in power in Washington right now will be asked to repay the national debt – is not just numbers, it is a moral issue. Romney recognizes this.
Romney placed his hand on the third rail of American politics, by proposing Social Security cutbacks. He said, “I believe we can save Social Security with a few commonsense reforms. First, there will be no change for retirees or those near retirement. No change. Second, for the next generation of retirees, we should slowly raise the retirement age. And finally, for the next generation of retirees, we should slow the growth in benefits for those with higher incomes.”
The Social Security trustees report that the system can currently pay only about three-quarters of scheduled benefits. In 2010, the report notes, that system wasn’t even self-sustaining, having to draw on the federal debt. If benefits aren’t trimmed, either taxes must rise or the federal deficit must accelerate anew. Neither would be good for the country, and that’s assuming China would keep loaning us additional money, which may not be an accurate assumption.... Many seniors need their Social Security checks, but those who don't should no longer receive them.
Let's be blunt: The tongue is really dumb. Unlike the rest of our sensory organs, which are exquisitely sensitive, that lump of exposed muscle sitting in the mouth is a crude perceptual device, able to only detect five different taste sensations... [but], we are convinced that the tongue is remarkably sensitive, able to perceive all sorts of subtle flavors. That's why we rhapsodize about the taste of our favorite foods and drinks...
A new study led by Adrian North of Heriot-Watt University adds to the indictment [of the tongue]... [He] has shown that when people drink wine to the accompaniment of music, they perceive the wine to have taste characteristics that reflect the nature of that concurrent music... Some of the participants sampled their glass to the tune of music identified... as powerful and heavy; others drank their wine to music rated earlier as subtle and refined; others to the tune of zingy and refreshing music; and lastly, the remaining participants drank their wine with mellow and soft music in the background....He's gone off the rails here, because he's now delved into the world of Neuro-Linguistic Programming and doesn't realize it (and neither do the creators of the experiments, apparently). Humans are highly suggestible creatures. In fact, stupid things like not shaking hands with someone can be enough to disrupt their routine and put them into a suggestible trance. If the general atmosphere of a place, its music, or the specific words a waitress (or experimenter) says, are being used to validate something OTHER than NLP, then that study is inherently flawed.
After they'd savored their wine for five minutes, the participants were asked to rate how much they felt the wine was powerful and heavy; subtle and refined; mellow and soft; and zingy and refreshing. The results showed that the music had a consistent effect on the participants' perception of the wine. They tended to think their wine had the qualities of the music they were listening to.
[T]his is why the ambience of a restaurant matters... For instance, when we eat a meal in a fancy place, full of elaborate place settings, fine porcelain and waiters wearing tuxedos, the food is going to taste different than if we ate the same food in a cheap diner.... [T]he music matters, but so does everything else. The tongue is easy to dupe.