U.S. Has No Competent Leadership In The Current Crisis-- We Are Flying Blind

When Obama was elected in 2008, Bush left him a major financial crisis that came to be known as the Great Recession. Obama appointed Rahm Emanuel chief of staff who was widely quoted as having said "You shouldn’t let a crisis go to waste," meaning it could be used to pass otherwise difficult legislation and enact policies that might get more scrutiny and opposition under other circumstances.

Needless to say, the Trump Regime is trying to do that right now and we've discussed their economic wish list for the catastrophe. particularly lowering taxes and jeopardizing Social Security and Medicare. Politico's Betsy Swan, though, looked in a different direction for something they'd like to do: suspending constitutional rights under cover of the crisis. Enter, stage right: William Barr, the Trumpst Attorney General. "The Justice Department," she reported, "has quietly asked Congress for the ability to ask chief judges to detain people indefinitely without trial during emergencies-- part of a push for new powers that comes as the novel coronavirus spreads throughout the United States." Barr is targeting the statute of limitations, asylum, the way court hearings are conducted and is "seeking the authority to extend deadlines on merger reviews and prosecutions."

The move has tapped into a broader fear among civil liberties advocates and Donald Trump’s critics-- that the president will use a moment of crisis to push for controversial policy changes. Already, he has cited the pandemic as a reason for heightening border restrictions and restricting asylum claims. He has also pushed for further tax cuts as the economy withers, arguing it would soften the financial blow to Americans. And even without policy changes, Trump has vast emergency powers that he could deploy right now to try to slow the coronavirus outbreak.

...In one of the documents, the department proposed that Congress grant the attorney general power to ask the chief judge of any district court to pause court proceedings “whenever the district court is fully or partially closed by virtue of any natural disaster, civil disobedience, or other emergency situation.”

The proposal would also grant those top judges broad authority to pause court proceedings during emergencies. It would apply to “any statutes or rules of procedure otherwise affecting pre-arrest, post-arrest, pre-trial, trial, and post-trial procedures in criminal and juvenile proceedings and all civil process and proceedings,” according to draft legislative language the department shared with Congress. In making the case for the change, the DOJ wrote that individual judges can currently pause proceedings during emergencies but that their proposal would make sure all judges in any particular district could handle emergencies “in a consistent manner.”

The request raised eyebrows because of its potential implications for habeas corpus-- the constitutional right to appear before a judge after arrest and seek release.

“Not only would it be a violation of that, but it says ‘affecting pre-arrest,’” said Norman L. Reimer, executive director of the National Association of Criminal Defense Lawyers. “So that means you could be arrested and never brought before a judge until they decide that the emergency or the civil disobedience is over. I find it absolutely terrifying. Especially in a time of emergency, we should be very careful about granting new powers to the government.”

Reimer said the possibility of chief judges suspending all court rules during an emergency without a clear end in sight was deeply disturbing.

“That is something that should not happen in a democracy,” he said.

Matt Cartwright (D-PA) is self-quarantined and has had some time to think about this threat. "It is abhorrent to use 'emergency' as an excuse to curtail American civil rights," he told me today. "We in Pennsylvania are rightly proud of our own Supreme Court Justice Owen J. Roberts.  A lifelong Republican, not only did he vote to uphold Social Security as constitutional. But, just as consequentially, he also was one of the dissenting votes in Korematsu v. United States, in which the Court upheld our shameful imprisonment of thousands of innocent, loyal Americans of Japanese ancestry during Workd War II. Roberts dissented because he understood the truth:  that when we surrender the civil rights of any American, we forfeit a part of why America is even a nation in the first place."

Jim Harper is an attorney who is running for the open blue congressional seat in northwestern Indiana. "The Justice Department's ploy is shocking," he told us this morning, "but not surprising. Donald Trump does not care about due process, and he does not care about fixing our broken criminal justice system. At a time when governments should be releasing non-violent and low risk offenders to reduce the risk to inmates and employees alike, Trump and Barr are using this emergency to hold inmates for longer than the law allows. Trump is once again trampling on the Constitution. We should all be concerned. Today, he is using this emergency to take rights away from inmates and asylum seekers. Who will be next?"





Lev Menand and Ganesh Sitaraman went through seven lessons we should have learned from the Great Recession. McConnell failed to move any of his reactionary pandemic legislation yesterday-- in part due to all the Republican senators quarantined. Even before that, Menand and Sitaraman were urging that we look back at policy choices made in 2008 to help us navigate the current emergency. "Policymakers," they wrote, "pursued a variety of crisis-fighting strategies, from investing in banks and automobile companies, to cutting taxes and green-lighting infrastructure investments, to re-regulating financial institutions and setting up new agencies to protect Americans from some of the harmful practices that helped precipitate and worsen the crash. Looking back at what worked and what didn’t can help us reprise successful strategies while avoiding pitfalls."

1 Fiscal Stimulus Should be Big, Salient, and Recurring. The 2009 stimulus was big, but not big enough. Famously, Christina Romer, President Obama’s chief economic advisor, proposed a stimulus of greater than $1 trillion, but was rebuffed by political advisors who thought that amount would appear too large. The stimulus that passed was not only too small, but it was largely composed of withholding tax reductions. This tax cut went unnoticed by most people, compared to getting a check from the federal government. (Incredibly, that was by design.) For a stimulus to work well, people should know and feel that they are getting money in their pockets. Ideas like cancelling student loan debt, expanding Social Security payments, and direct transfers are therefore far better than payroll tax cuts. And as economic crises generally do not resolve themselves immediately, a stimulus should not be a one-time-only action. Indeed, after the last stimulus, the federal government adopted sequestration, a disastrous austerity policy that ran directly counter to continuing to spark growth and recovery. A stimulus should be sustained with recurring elements to restore confidence and ensure that recovery does not depend on the legislature reauthorizing expansionary policy every six months.

2 Target Main Street. During the 2008 crisis, policymakers targeted the bulk of the bailout money at Wall Street financial institutions, rather than homeowners. The result was twofold. Wall Street recovered relatively swiftly, while homeowners did not; and the economy was rebuilt on a shaky foundation as homeowners struggled for years to get above water on their mortgages. Some at the time argued for rescuing homeowners, rather than big financial institutions, but their arguments went unheeded. This time, instead of homeowners, it’s small businesses and workers who are in trouble. Restaurants, bars, mom-and-pop retail, and other local enterprises are suffering from physical distancing. Workers are losing their jobs. Policymakers’ focus needs to be on proposals that will keep these businesses and individuals afloat. Stabilizing household balance sheets will address one of the roots of the crisis and lay the foundation for economic recovery.

3 Reforms Should Make Structural Improvements. Both bailouts and a stimulus can be designed as one-time policies or can be designed to have structural implications to get the economy on a safer, stronger, more secure footing in case of a future crisis. Reducing withholdings-- as the 2009 stimulus did-- or the payroll tax cut that the White House proposed recently do not serve that purpose; in fact, they could weaken important safety net programs. Instead, policymakers should push for proposals like paid leave, and condition bailouts on higher wages and governance reforms. These kinds of changes strengthen the economy after the crisis subsides-- and make it more resilient for when the next crisis hits.

4 Bailouts Without Stringent Conditions are a Bad Idea. When the government bailed out financial institutions in 2008, it did so with few conditions. This created two sets of problems. First, rescued firms were free to use taxpayer funds to pay bonuses, rather than for shoring up the economy at the household level. And second, it re-established that these institutions were too big to fail, and gave them license after the fact to return to irresponsible, risky behavior. Thus, many of the biggest banks have grown since 2008 and pushed for deregulation, increasing the likelihood of future bank bailouts. Executives and investors did well during the boom years, knowing that the government would likely rescue their firms if things went bad. While some say that we should simply let irresponsible private companies fail, certain businesses are effectively public utilities for which continuity of service is of critical importance. Banks are essential to economic functioning, and in a crisis the government is typically the only source of new capital to keep them operational. Airlines, which face serious distress today, also provide basic infrastructure. Policymakers need to keep these businesses running but they do not need to bail them out unconditionally.

5 Debt Restructuring Should Focus on Forgiveness. In a shrinking economy, facing growing deflationary pressures, some debts cannot be repaid. But default and foreclosure are hugely disruptive and damaging, and in the current environment, actively dangerous. During the Great Recession, policymakers adopted technical, complicated policies like the Home Affordable Modification Program (HAMP) to get at the ongoing mortgage crisis. But HAMP was difficult to navigate, slow to act, helped too few people, and disproportionately benefited big companies. HAMP was also inadequately sized. Mortgage debt overhang continued, holding back consumer spending and impeding the recovery. A better, simpler, and more effective response would alleviate suffering by simply forgiving debt and eliminating debt overhang.

6 Technocratic Regulation Is Fragile and Often Ineffective. After the financial crash, Congress passed the Dodd-Frank Act, a law that reformed the financial system largely by requiring technocratic governance by administrative agencies, rather than through structural improvements to the design of financial institutions. For example, instead of breaking up the banks through a simple, clear Glass-Steagall regime, the Volcker Rule prohibited proprietary trading, but with some carve-outs. Companies heavily lobbied regulators on the specifics, ultimately stretching the rule to hundreds of pages of obscure language. A few years later, banks succeeded in rolling back several aspects of the Volcker Rule. Looking forward, policy reforms shouldn’t focus on either deregulation or technocratic regulation—they should focus on structural reforms that create the conditions for enduring economic stability.

7 If it Functions as Money, it Should be Regulated as Money. The Federal Reserve recently announced it would back commercial paper markets, repo markets, and money market mutual funds, serving as a lender of last resort for issuers of these deposit-substitutes. This gives these firms the benefits of a public subsidy without imposing any of the prophylactic safeguards designed for bank deposits. Ordinarily, banks get the benefit of federal insurance through the FDIC, in return for being regulated and paying fees to the government. This prevents a “run” on the banks, and it was a critical part of the New Deal. In 2008, a run in the money markets helped deepen the financial panic and amplify the recession, and yet this market was never fully reformed. We shouldn’t make the same mistake twice. If the Fed is going to backstop these money-substitutes, they should be brought into the bank regulatory regime.

Now If Republicans Don't Drive the Economy Into A Double-Dip Recession...

A report just out by Congress's Joint Economic Committee shows a mixed bag state by state when it comes to job growth and economic recovery, but overall the news is good.

• Forty-six states and the District of Columbia added private sector jobs between January and November 2010. The District of Columbia saw the largest expansion of private sector payrolls, expanding by 4.0% in the first eleven months of 2010 and performing significantly better than the national average of 1.1% growth. A number of other states have expanded private sector payrolls by more than 2% in 2010, including Oklahoma (2.7%); Texas (2.5%); Minnesota (2.3%); Arkansas (2.2%); North Dakota (2.1%); Louisiana (2.1%); and Indiana (2.0%).

• Only four states did not experience a net increase in private sector jobs during the first eleven months of 2010. Those states are New Mexico (-0.3%, -1,700 jobs); Rhode Island (-0.5%, -2,000 jobs); Missouri (-0.7%, -15,100 jobs); and Nevada (-1.9%, -18,600 jobs).

• The manufacturing sector added 114,000 jobs since the start of the year (a 1.0% increase in employment), despite a rocky and uneven recovery. Several states with large manufacturing sectors saw consistent increases in production employment. For example, Texas’s manufacturing sector gained jobs in almost every month of 2010, expanding by 3.2% in 2010 and adding 25,900 jobs. Employment within Ohio’s manufacturing sector grew by 2.9% over the same period, adding 17,600 jobs. Other Midwestern states that saw large expansions in their manufacturing sectors in 2010 include Michigan (3.1%, 13,700 jobs); Minnesota (4.4%, 12,700 jobs); Illinois (1.7%, 9,600 jobs); Indiana (1.8%, 7,500 jobs); and Iowa (3.2%, 6,400 jobs).1

• The professional and business services sector added 373,000 jobs this year (a 2.3% increase in employment). Thirty-nine states and the District of Columbia added jobs in the professional and business services sector from January to November 2010. California gained jobs in this sector in each of the first eleven months of 2010 for a total gain of 55,600 jobs this year. The growth in California’s professional and business services sector (2.8%) exceeds the national average (2.3%). Other states whose professional and business services sectors expanded in 2010 include Indiana (10.6%, 27,800 jobs); Mississippi (9.0%, 7,500 jobs); Iowa (7.0%, 8,200 jobs); and the District of Columbia (6.4%, 9,600 jobs). Texas (5.5%, 67,100 jobs) and New York (2.7%, 28,900 jobs) also gained a substantial number of jobs in the professional and business services sector, although the gains in those states as a share of employment within the industry were not as large as in other states.

• The leisure and hospitality sector added 183,000 jobs this year (a 1.4% increase in employment). Gains in the leisure and hospitality sector were uneven over 2010. In July 2010, 37 states and the District of Columbia added jobs in the leisure and hospitality sector. More recently, in November 2010, 23 states and the District of Columbia added to their leisure and hospitality sectors.

Short version: Job creation is going forward at a faster pace than in previous recoveries, even though this was the harshest recession since the 1980s. Of the 8 million jobs Bush's Republican policies destroyed, something like a million have come back in the past year as those policies were ameliorated to some extent. Had Obama and the Congress moved more aggressively to dump more of the Republican greed agenda, it is likely the country would be much further along the road now.

What worries me is that now that the GOP has captured control of the House-- and with the extremely conservative Senate even more conservative-- the country is likely to start sliding backwards. This week CNN reported a dangerously huge and widening gap between the very rich and the average American in terms of household wealth.

The richest 1% of U.S. households had a net worth 225 times greater than that of the average American household in 2009, according to analysis conducted by the Economic Policy Institute, a liberal think tank. That's up from the previous record of 190 times greater, which was set in 2004.

The widening gap came even as wealthy households' average net worth tumbled 27%-- to about $14 million-- between 2007 to 2009. That's the first time that they suffered a decline since the three-year period of 1992 to 1995.

Meanwhile, the average family's net worth plunged 41%-- to just $62,200-- from 2007 to 2009, according to EPI's calculations.

How are newly empowered Republicans going to handle this? They are quickly handing effective power back to the revolving-door lobbyists who drove the country into a ditch the last time the GOP had power. Yesterday we talked about how clueless Illinois teabagger Joe Walsh is turning down standard congressional benefits, like healthcare and retirement packages. What we didn't get into is that he's already hired a Wall Street lobbyist as his chief of staff.

And Walsh is hardly the biggest threat to the economy and the well-being of American families. He's a lowly freshman who isn't even welcome in his own party's inner circle. Powerful new committee chairs are doing the same thing.

A few days ago, incoming Agriculture Chairman Rep. Frank Lucas (R-OK) announced the hire of Ryan McKee as the senior staffer to oversee the Commodity Futures Trading Commission. McKee is currently a lobbyist working for the U.S. Chamber of Commerce’s division dedicated to deregulating complex derivatives products. In her new role working for Lucas, McKee will be liaising with regulators in charge of implementing new rules under the Dodd-Frank Wall Street reform law to overhaul the over-the-counter derivatives market.

As Think Progress reported, the Chamber, which is funded by AIG, JP Morgan, CitiGroup, and other financial interests, took the lead role in fighting to defeat Wall Street reform efforts. Last year, the Chamber organized a conference call with other financial industry lobby groups and bank lobbyists to coordinate their efforts. As Tim Fernholz reported, McKee made clear that she was fighting to “kill” financial reform:

“We want to make sure that we hold all the Republicans and are able to influence enough Democrats to have a working majority to kill this thing outright or modify it to the point where it’s palatable to the business community,” Jason Matthews, the Chamber’s director of congressional affairs, told the callers. Ryan McKee, a senior director at the Chamber’s Center for Capital Markets, was even more direct in response to a question from an caller: “We’re fundamentally trying to kill this,” she said.

UPDATE: Fred Upton Too Moderate For The GOP?

Remember a couple weeks ago when the House Republicans were fighting amongst each other over the all-important (a huge source of political graft and corruption) Energy and Commerce Committee? The far right and Big Business interests, especially Big Oil, were claiming that Michigan mainstream conservative Fred Upton was practically a liberal because he liked ebergy saving light bulbs or something absurd like that. But Upton beat out bribe-taking sociopath/BP apologist Joe Barton (R-TX) anyway. Upton might indeed be a little moderate for the current Republican Party-- but where it really counts, he fits right in. Upton just hired notoriously crooked Industrial Medical Complex lobbyist Howard Cohen to run the committee's show on health care issues. The bribes will just keep flowing ino the GOP through the revolving door.

How Alan Greenspan Helped Bring Down the US Economy-- And What Boehner And His Cronies Have In Store For Us If They Win In November

Shaun Connell is a DWT reader who describes himself as a "recovering laissez faire follower." He's also a serious investor who's been researching the causes of the Bush Recesssion and I asked him to guest post on some of his findings for us today. You can find more of his work at the websites he manages dealing with debt and other financial issues. Shaun:

Alan Greenspan, the former Federal Reserve Chairman, appears incapable of issuing a mea culpa despite mounting evidence that he played a significant role in causing our recession. “The Maestro” continues to defend against his detractors by affirming that the entire dark episode in the financial life of the United States and the world happened as a maverick event that even a financially sagacious man could not predict. He's rivaled only by Bush and GOP leadership when it comes to economic denial regarding the bubble-nature of outrageously low interest rates.

In an interview with Bloomberg Television in September, 2010, Greenspan asserted his belief that the crisis was a singular event without precedence in the history of the world. He claimed that there was no instance of short-term credit withdrawal across the planet that quite matched what happened after the fall of Lehman. Apparently oblivious to the financial crisis that occurs every five years like clockwork since the middle of the 1970s, he insisted that the entire catastrophe was a rare, unprecedented event that caught everyone by surprise.

Defending his track record regarding his role in instigating the Fed’s monetary policy prior to the financial disaster, Greenspan insisted on the sagacity of his decision making, suggesting that the low interest rates that he initiated during his reign as the Fed Czar was only a part of a massive financial credit splurge. It did not seem to occur to him that it was highly unlikely that the United States Federal Reserve played a minor and inconsequential effect on the monetary trend that affected the entire world. In fact, he went on to disingenuously claim that the root of the problems in the monetary policy were related to the Cold War because the effects of that era reduced long term interest rates. In contrast to the economic effects of the end of the Cold War, he argued, his policies only had an in insignificant aspect effect.

In March 2010, Greenspan issued a defensive 48 page document to the Brookings Institute that showed he was far more aware of the economic crisis than he let on during the Bloomberg Television interview.

According to this paper, the Feds didn’t pop the alarming spread of the credit bubble in 2007 because the dot-com fiasco, the 1990-1991 recession, and the 1987 recession did not significantly affect the global GDP, thus leading sophisticated investors, as well as the Federal Reserve, to believe that future recessions would all be equally forgettable.

And by "forgettable" I mean in the short-term by the American public. Bush and Greenspan worked together to create as much of a bubble as they possibly could as a reactionary response to the dot-com bubble collapse, 9/11 and every other economic problem the money-printing duo happened to run accross.

Bush and Greenspan worked together to duct-tape the US economy so it looked healthy to the public. The weapons of choice were war expenditures and easy credit. Plus, don't forget George Bush's not-so-brilliant "ownership society" ideology, where consumers would move from renting to asking banks for loans in order to buy houses. "Ownership" of course, was just a clever way of saying "go into debt to create banking profits to make the bubble last a little longer."

In other words, a financial crisis, like a passing cold, did not deserve much serious consideration because taking economics seriously just might cost an election-- and after all, that's all that really matters to a lot of politicians. Moreover, the reason the Fed did not burst the bubble, although it had the power to do so at the time, was because it did not want to dampen economic growth. This is in direct contradiction to what he said in the Bloomberg Television interview when he talked about how the crisis could not be anticipated.

What we have here is a massive, dangerous contradiction, unfortunately only one of many instances of the misdirection offered by the man who played a huge role in causing the recession. In March, he knew about the foreseeable and preventable nature of economic crisis, but somehow, in September, the economic crisis appeared to come out of nowhere, a strange anomaly in an otherwise well-regulated and forecastable economic system.

Is The Economy Turning Around? A Little?

Wall Street is flying again-- and should soon cross has now crossed the 10,000 point mark. I'm not so sure that the success of a bunch of under-regulated gangsters and con-artists are doing well is such great news. But I was cheered this week to start looking at reports from states pointing to the job creation the Stimulus has been underwriting. Ohio reports that 13,000 full time jobs have been saved or created in the state through the federal stimulus package. The number in Wisconsin is 8,282. Nationwide jobs in education have fared best.

Public school teachers are expected to be the big winners when states reveal for the first time how many jobs were created or saved during the first months of President Obama's $787 billion stimulus plan.
State officials worked into the weekend as part of the most ambitious effort ever to calculate, in real time, the effect of a government spending program.

Whether it is 11 jobs repaving a road in Caldwell, Texas, or one job helping run Utah food banks, states must say exactly what they have done with the federal aid.

The data, to be released in two installments this month by the Recovery Accountability and Transparency Board, the independent body set up by Congress to monitor Recovery Act spending, will come amid growing political pressure on the Obama administration to prove that the stimulus spending is saving and creating jobs.

On Thursday, the board is to release data on the impact of direct spending from federal agencies. That will include jobs such as fixing military bases and national parks.

Later this month, the board is to release grant data on jobs such as construction workers hired to repair local highways using federal money-- and teachers.

Based on preliminary information obtained by the AP from a few states, teachers appear to have benefited most from the early spending.

That is because the stimulus sent billions of dollars to help stabilize state budgets, averting what officials said would have been tens of thousands of teacher layoffs.

In California, the stimulus is credited with saving or creating 62,000 jobs in public schools and state universities. Utah reported saving 2,600 teaching jobs. In both states, education jobs represent about two-thirds of the total number of jobs saved. Missouri reported saving 8,500 school jobs and Minnesota 5,900.
In Michigan, where officials said 19,500 jobs had been saved or created, three out of four are in education.

Construction companies also are expected to report strong job numbers thanks to billions of dollars in highway money, but those figures will vary by state, because some have spent the money faster than others.

We'll all be eager to see www.recovery.gov post its first comprehensive reports tomorrow. Meanwhile, though, Obama's Wall Street guy, Lawrence Summers, claimed yesterday that the administration had "helped pull the U.S. economy back from the abyss with aggressive efforts to spur growth and stabilize financial markets."

Defending policies that Republicans have attacked as ineffective, National Economic Council Director Lawrence Summers argued measures put in place by the administration, including a $787 billion stimulus package, had helped turn back the deepest U.S. recession since the Great Depression.

"Thanks largely to the Recovery Act, alongside an aggressive financial stabilization plan and a program to keep responsible homeowners in their homes, we have walked a substantial distance back from the economic abyss and are on the path toward economic recovery," Summers wrote to House Republican leader John Boehner.

Obama is facing rising clamor to take new steps to lift the economy and jump-start job growth as the U.S. unemployment rate edges toward 10 percent.

The bleak jobs picture, and soaring fiscal deficits that reflect the cost of battling the recession, could put some of Obama's Democratic allies at risk in next year's congressional elections, unless voters are convinced they are doing all they can to help the economy.

"Every American is asking this administration: Where are the jobs?" Boehner said in a statement. The Ohio Republican noted the economy had lost roughly 3 million jobs since Congress had approved the stimulus package in mid-February.

Responding to a letter Boehner had sent Obama, Summers pointed to a slowing pace of job losses as evidence that the administration's policies were working. "We have seen a substantial change in the trend of job loss," he said... Summers told Boehner that private forecasters have estimated that the stimulus program added 3 percentage points to second quarter GDP, tempering what would have been an even deeper economic swoon.

He also said they believe the unemployment rate would be 2 percentage points lower by the end of 2010 than it would have been without the stimulus plan.

Most forecasters estimate the economy resumed growth in the third quarter, although some still worry about the risk of a "double dip" recession in which the recovery stalls.

Summers took note of the improvement in U.S. stock market performance since early this year and of recent data suggesting the housing market, which was central to the financial market collapse, was stabilizing.

Hitting back at Republicans who are trying to lay blame on Obama for a record U.S. budget deficit, Summers said Obama inherited a deficit well in excess of $1 trillion when he took office. He said the policies of Obama's Republican predecessor, former President George W. Bush, led to the shortfall.

"The bipartisan commitment to fiscal discipline that existed during the 1990s evaporated during the 2000s. Every major policy enacted during this period violated the principle of paying for new proposals," Summers wrote.

Although the Wall Street contingent surrounding Obama (Summer-Emanuel-Geithner-Bernanke) would never go for it, what needs to happen now-- and, no doubt, what FDR would have done-- is to raise taxes on the wealthiest slice of society that benefited in such an unbalanced way under the Bush Regime, and then use that money to boost the Stimulus, which really was only half done on the first round.

Meanwhile, Robert Borasage of he Campaign for America's Future is worrying about the conservative jihad we'll all see tomorrow as the House Financial Services Committee starts the process of weakening Obama's consumer protection measures on behalf of their corporate paymasters. "Without strong regulation of the banks and the shadow banking system," said Borasage this morning, "large banks will feel free to gamble with the assumption that taxpayers will cover their losses. This is a recipe for another financial debacle." But instead of having elected representatives to protect us against the financial systems predators and incompetents, we have Republicans and Blue Dogs completely beholden to Wall Street, willing to impoverish their own constituents to protect their campaign financiers.

Patty has gobbled up $968,910 in thinly veiled bribes from banking sector since 2004

The banking lobby has been working the backrooms to weaken the reforms proposed by the administration. The central administration proposal – the creation of a new Consumer Financial Protection Agency to protect consumers from financial frauds and rip-offs – has already been critically compromised. Financial institutions are no longer required to offer consumers simple and plain basic mortgages and loans. The enforcement of the Community Reinvestment Act has been stripped from the CFPA. And even worse, the oversight authority of the new agency is placed in a council of the very same regulators that failed consumers completely in the run-up to the financial collapse. Rewarding their failure is simply indefensible.

The committee also seems intent on weakening rather than strengthening the current inadequate laws relating to derivatives, the exotic financial instruments that Warren Buffett termed “weapons of financial mass destruction.” This is simply abandoning the public interest to serve the private interests of the banks.

When Senate Majority Whip Richard Durbin declared that the “banks own the place,” he clearly wasn’t kidding. But legislators should beware. The banking lobby got its way when few were looking and even fewer could understand the arcane battles over deregulation.

Those days are gone. Americans have lost trillions of dollars in savings and assets because of the irresponsibility of a financial industry that turned itself into a casino, taking bets without even the prudence that a Las Vegas bookie exercises. Then they demanded hundreds of billions of taxpayers’ dollars to bail them out or they would bring down the entire global economy. Americans are livid and paying attention. Voters will hold accountable legislators who undermine the reforms we need to serve their Wall Street contributors.

EVEN BUSH IS LAUGHING AT McCAIN'S CYNICAL GAS TAX PROPOSAL

The McBush economic team

When I saw the name on the article I thought it was by John McCain's embedded publicist at the Washington Post. Then I realized it was in the NY Times and saw it was John Broder, not the Post's pathetic old hack with the same last name. The story highlights what Broder calls Democratic division over McCain's cynical summer gas tax holiday. As soon as Obama pointed out that it was a bad idea, Hillary jumped in to support their respective campaign's common enemy: the American people.

Senator Hillary Rodham Clinton lined up with Senator John McCain, the presumptive Republican nominee for president, in endorsing a plan to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for the summer travel season. But Senator Barack Obama, Mrs. Clinton’s Democratic rival, spoke out firmly against the proposal, saying it would save consumers little and do nothing to curtail oil consumption and imports.

While Mr. Obama’s view is shared by environmentalists and many independent energy analysts, his position allowed Mrs. Clinton to draw a contrast with her opponent in appealing to the hard-hit middle-class families and older Americans who have proven to be the bedrock of her support. She has accused Mr. Obama of being out of touch with ordinary Americans who are struggling to meet their mortgages and gas up their cars and trucks.

Mrs. Clinton said at a rally on Monday morning in Graham, N.C., that she would introduce legislation to impose a windfall-profits tax on oil companies and use the revenue to suspend the gasoline tax temporarily.

Above I referred to McCain as cynical, which he certainly is, but in the interest of fair play, I might add that Mrs. Clinton's cynicism is every bit as virulent as his. I'm so sure Miss McConnell, who has obstructed everything the Democrats have tried to do and even every bipartisan proposal to ease the energy crisis, is going to allow a windfall-profit tax on one of the Republican Party's biggest corporate donors, the oil and gas industry. And Bush is just frothing at the mouth to sign it, right? Look, McCain has made a record of not even voting for the most dire national security needs-- like safety in our ports and equipment for our troops in the field-- if it meant closing corporate tax loopholes or doing away with even a fraction of the tax breaks for people making over a $1,000,000 a year. So... this is a total non-starter.

Bush's "economic speech" this morning was one of the most nakedly partisan rants I've heard from the bumbling idiot in months.
"It's a tough time for our economy," he muttered. "Across our country, many Americans are understandably anxious about issues affecting their pocketbook, from gas and food prices to mortgage and tuition bills. They're looking to their elected leaders in Congress for action. Unfortunately, on many of these issues, all they're getting is delay." The Bush Economic Miracle was replaced by the Bush Recession, in his mind at least, by Democratic foot dragging on his incredibly unsound economic agenda-- an agenda that has been disastrous for the economy and for the American people. But what does this imbecile know? Two weeks ago he seemed flabbergasted when some mentioned that the price of gas was near $4/gallon. [I wish it would go back to that in L.A., where it is heading towards $5/gallon, thanks to the Bush-Cheney Energy Plan to enrich the few at the expense of the rest of us.] Would he like to leave the country with a full fledged Depression instead of a Recession?

But even the doltish Bush isn't stupid enough to buy into McCain's and Hillary's gas price cynicism. When a reporter asked Bush about the McCain-Hillary plan he just smirked, babbled some noncommittal answer-- not wanting to mention that McCain is even more clueless than he is-- and said he didn't want to inject himself into the ongoing presidential race.

The presidential race? McCain and the Hilldog are talking about this summer and this summer, alas, we'll have the same jerk in the White House who first stole the election in 2000. He doesn't want to inject himself? He's the only one who could sign or veto this "proposal," which is strictly campaign fodder, as even Bush recognized.

Meanwhile, not everything is getting more expensive every day. Housing prices dropped in February at the fastest rate ever, a widely watched index showed on Tuesday, reflecting that the housing slump is gaining momentum and showing no signs of letting up.


UPDATE: OBAMA REJECTS THE DC INSIDERS' PERSPECTIVE ON THE ECONOMY

"At a time when so many Americans are struggling, we deserve better than special interest giveaways from the White House and transparent political gimmicks on the campaign trail. George Bush's solution to a recession and an energy crisis of historic proportions is warmed-over Washington proposals that would pad oil company profits and give more tax cuts to the wealthiest Americans who don't need them and didn't ask for them.

"Meanwhile, the two Washington candidates in this race are playing the same old Washington game where you try to distract voters without doing anything to deliver meaningful relief for working families. As President, I'll pursue real change by providing a tax cut of up to $1000 for working families, and investing $150 billion in clean, affordable, renewable sources of energy to create millions of jobs and end our addiction to oil. It's time to stop dusting off tired Washington ideas like gas tax holidays and drilling for oil in the Arctic National Wildlife Refuge so that we can finally be honest about the challenges we face, bring this country together, and push back against the special interests that have blocked progress for decades."

THE BUSH ECONOMIC MIRACLE

Click on the face of your favorite Bush Regime criminal

Harding, Coolidge, and Hoover were the direct antecedents of the Bush I thru Bush II (and you know who that includes) roaring turn of the century excesses. The corruption, avarice, selfishness and the triumph of the over the top excesses of predatory laissez faire capitalism nearly brought America to its knees back in the 1930s. There was a time when it looked like either a socialist/communist revolution or a fascist reaction would triumph. But FDR won the day and saved capitalism from itself. The reforms of his many administrations-- always hated by the far right-- have since been wrecked by Reagan, the Bushes... and Clinton. And the result has the country hovering on the brink of catastrophe again. We'd better hope and pray that Obama is up to an FDR-like task of saving capitalism from itself again.

Saturday's NY Times had a story about the incredible bargains now available for business class transatlantic fliers. Instead of $8,000 for the hop over the sea, it can be as low as $4,000 if you book in advance. For joy... I guess. And it fits very well with Bush being stunned when a reporter asked him what he thought about gasoline going to $4 a gallon. He looked like he didn't comprehend. He rarely does. Today's Times, you'll be happy to read, assures us that despite tough times, the ultrarich keep spending. No recession for them. 80,000 more Americans lost their jobs in March. Real unemployment is close to 13% of the workforce and inflation is probably double what the government reports. But for the few thousand families for whom the Bush years really did produce an economic miracle, it's private jets, helicopters, Hummer limousines, Ferraris, Lamborghinis...

Some businesses that cater to the superrich report that clients-- many of them traders and private equity investors whose work is tied to Wall Street-- are still splurging on multimillion-dollar Manhattan apartments, custom-built yachts, contemporary art and lavish parties.

Buyers this year have already closed on 71 Manhattan apartments that each cost more than $10 million, compared with 17 apartments in that price range during all of 2007. Last week, a New York art dealer paid a record $1.6 million for an Edward Weston photograph at Sotheby’s. And the GoldBar, a downtown lounge, reports that bankers continue to order $3,000 bottles of Rémy Martin Louis XIII Cognac.

“When times get tough, the smart spend money,” said David Monn, an event planner who is organizing a black-tie party on May 10 for dignitaries and recent purchasers of apartments at the Plaza Hotel; the average price there was $7 million. “Short of our country going on food stamps, I don’t think we’re doing anything differently.”

Some extreme spenders say they have not cut back on their impulse Bentley or apartment purchases because they have made so much money in the good times from the Internet, stock market and real estate. Some have been able to move their money into investments like private equity that are available only to those with extensive capital. Some rationalize cars and home renovations as “investments.” And some simply don’t want to skimp on the weddings and anniversary parties that they see as milestone events.

...Many economists warn that the nation’s financial troubles may spread far more widely, and could ultimately touch even the wealthiest. The financial sector could lose as many as 20,000 jobs in New York City by the end of 2009, according to the city’s Independent Budget Office. And at a March 18 policy meeting, Federal Reserve Board members raised the possibility of a “prolonged and severe economic downturn,” recently released minutes show. That threat has undoubtedly caused some affluent people to consider some degree of frugality.

Meanwhile millions of Americans who have always thought of themselves as "solidly middle class" are worrying about rapidly diminishing savings tied up in the plummeting real estate market (their homes), an unregulated mess that allowed the very rich to get very much richer. And they're worried about their parents' "golden years" and they're worried about their children's (immediate) futures. Today's Times happens to also have a story about skyrocketing medical costs, as criminal insurance and pharmaceutical companies gorge themselves on what could possibly be the end of the good times of unrestrained predatory capitalism. To me it sounds like the seeds of the French Revolution.

Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases.

With the new pricing system, insurers abandoned the traditional arrangement that has patients pay a fixed amount, like $10, $20 or $30 for a prescription, no matter what the drug’s actual cost. Instead, they are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month.

The system means that the burden of expensive health care can now affect insured people, too.
No one knows how many patients are affected, but hundreds of drugs are priced this new way. They are used to treat diseases that may be fairly common, including multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers. There are no cheaper equivalents for these drugs, so patients are forced to pay the price or do without.

Instead of spreading the costs for health insurance across the whole spectrum of insured people, Republican brand health care allows insurance companies to stick seriously ill people with crippling, financially catastrophic bills. It's another erosion of the fabric of civil society, another result of people like the Bushes and Cheney sneering at the concept of all of us being in the same boat-- and of people like the Clintons winking and nodding and going along for the ride. You tell me, are Bill and Hill one of us? Or one of them?

And don't think the population doesn't notice. This morning Paul Krugman goes over the University of Michigan Survey Research Center's most recent findings: "Americans are more pessimistic about their situation than they have been for more than a quarter century." The Bush Economic Miracle, like the Bush tax cuts for the rich, haven't done squat for 90% of the population. "[T]he percentage of Americans saying that they’re better off than they were five years ago is at its lowest level in 44 years of polling." Krugman has some ideas about why there is so much glumness:

Our bleakness partly reflects the fact that most Americans are doing considerably worse than the usual economic measures let on. The official unemployment rate may be relatively low-- but the percentage of prime-working-age Americans without jobs, which isn’t the same thing, is historically high. Gross domestic product is up, but the inflation-adjusted income of the median family is probably lower than it was in 2000.

...A major reason we’re feeling so down now is that for working Americans the boom never did come back. Job creation in the post-2001 recovery was pathetic by Clinton-era standards; wages barely kept up with inflation. Instead, corporate profits and the incomes of a tiny elite surged-- sucking up so much of the economy’s growth that only crumbs were left for everyone else.

Now the boom that wasn’t has gone bust-- and Americans, understandably, have lost confidence in the prospects for a return to real prosperity.

They have also, I’d suggest, lost confidence in the integrity of our economic institutions.

Early this decade, when the great corporate scandals broke-- Enron, WorldCom, and so on-- I expected big-business corruption to become a major political issue. It didn’t, partly because the march to war had the effect of changing the subject, partly, perhaps, because Americans weren’t ready to take a broadly negative view of the system that brought them the previous decade’s boom.

But my impression is that the subprime crisis-- with its revelation that titans of finance were dealing in funny money and its tales of failed executives receiving hundred-million-dollar going-away presents-- has resurrected the sense that something is rotten in the state of our economy. And this sense is adding to the general gloom.

Krugman offers some hope, if we elect the right government in November. He's looking for pro-worker, pro-consumer policies from a Democrat, reasonable re-regulation from a Democrat. "A return to pro-labor policies could help raise real wages. Pro-competitive policies-- which are not the same thing as giving powerful businesses whatever they want-- could help America regain its leadership in information technology. In other words, there’s a lot that could be done to perk up our sagging confidence." On the other hand, the corporate media could actually get their candidate in and McCain will make Bush look like the good old days.

Bill Sher reminds us that even McCain has changed his mind-- again-- on the economy. He once said (way back in January) that the fundamentals of the economy are too strong for a recession. Now, months and months and months later, he has finally admitted what almost all Americans know all too well: we are in a recession. I asked rural development expert Bill McCamley, a progressive Democrat running for Congress in New Mexico's huge, rural 2nd CD, to talk about the economic dilemmas facing small town America. We'll have that up later today. Meanwhile, in the interest of fairness, here's a short and excellent video that sums up the Bush Economic Miracle:

McCAIN'S ECONOMIC POLICIES STAY THE COURSE TO KEEP THE BUSH ECONOMIC MIRACLE ROLLING ALONG

I woke up to the news that the Bush Regime's economic miracle of unregulated market capitalism and "free trade" (free of protections for society) has inspired an unemployment rate of 5.1%. The Bush Recession grows deeper and more painful. And John W. McCain is eager to make it worse by supercharging the agenda and policies that caused it-- much the way Herbert Hoover did when he followed Calvin Coolidge. According to this morning's NY Times "the economy shed 80,000 jobs in March, the third consecutive month of rising unemployment, presenting a stark sign that the country may already be in a recession." The Washington Post points out that "U.S. employers have now eliminated more than 232,000 jobs in the last three months. The U.S. has not lost jobs for three months in a row since mid-2003, as the effects of the tech bubble's collapse and the 2001 terrorist attacks on New York and Washington were beginning to dissipate."

Sharp downturns in the manufacturing and construction sectors led the decline, the biggest in five years. The Labor Department also said employers cut far more jobs in January and February than originally estimated.

There were fewer jobs in March than there had been five months earlier. In the last 50 years, whenever there has been an employment downturn like the one of the last few months, a recession has followed.

On top of that, wages for those who do have jobs continue to lose buying power as inflation ramps up. Remember those secret Cheney energy meetings he wouldn't allow anyone to know about? This is the result. This morning David Sirota's column in the Denver Post shows how McCain's breathtaking flip flops "have run that 'Straight Talk Express' into the ditch of hypocrisy. Just look at McCain's actions on two huge issues: energy and campaign-finance reform... Now, rushing to build a war chest, McCain is doing everything short of putting a For Sale sign on his forehead. During a nationwide fundraising tour, he was showered with big donations after defending the lobbyist-written trade policies that have driven down wages. He is sure to raise even more cash as he shows his Keating Five roots shilling for the financial industry. Last week, approaching the 21st anniversary of that scandal, McCain followed the advice of banking executive-turned-campaign-adviser Phil Gramm and demanded Congress oppose new Wall Street regulations in the wake of the credit crisis.

"Indeed, this reversion to form is McCain's catharsis of corruption, proving the senator is just another hired gun. In so publicly embracing Big Money, his message has become a series of embarrassing admissions-- a campaign version of the book Confessions of an Economic Hit Man. There is just one difference: This Arizona hit man expresses absolutely no remorse."

Meanwhile McBush allies at Big Oil seem to be laughing off consumer pain at the pump. "Rising gasoline prices and flush profits are putting the oil industry on the political defensive in Washington, but industry executives gave little ground Tuesday to hostile members of Congress or angry truckers on the road. Top oil company executives [and their Republican allies like Arizona Congressman John Shadegg] pushed back against attacks on their industry at a congressional hearing, calling for the right to drill in off-limits areas and criticizing a proposal that would take away billions of dollars in tax breaks for oil to subsidize renewable energy technology."

Tuesday, Congressional Democrats used a hearing of the House Select Committee on Energy Independence and Global Warming to revive their case for legislation that would repeal $18 billion of tax incentives for oil and natural-gas producers and use the savings to finance tax credits and other incentives for wind-power projects, solar panels and more energy-efficient cars.
 
The proposal has been stymied once by opposition from President Bush and Senate Republicans. But with voters fuming over rising fuel prices, Tuesday's debate offered a new opportunity for Democrats to pummel the oil industry.
 
The hearing coincided with scattered protests around the country by independent truckers upset over the sharp rise in the price of diesel fuel, which now is more than $4 a gallon in many parts of the country. Some truckers pulled their rigs off the road, demanding that contractors pay them more to cover higher fuel costs.

The oil executives threatened that if Congress takes away their tax breaks they will simply "shift more production and exploration overseas, and lessen overall energy production." The McBush Republican philosophy of unregulated laissez faire capitalism was bad when McCain was born (as the Great Depression kicked in, the last time a succession of corrupt Republican adminstrations of, for and by the super rich drove our country into dire economic calamity). The policies (the greed and selfishness agenda) implemented by Bush-- with the help of rubber stamp Republicans in Congress like McCain-- and now being espoused by McCain and his lobbyist-driven presidential campaign, are wrecking the economy to an even worse extent.

NEW POLL INDICATES MOST AMERICANS REJECT EVERYTHING ABOUT THE DIRECTION McCAIN HOPES TO TAKE AMERICA

First off, the just-released New York Times/CBS News is far from the worst ratings I've seen Bush get lately. More leading edge polls have had his approval ratings down in the teens-- as low as 14% when it comes to his economic job approval. Still this mass-consumption polling can't be looked at as anything but extremely bad news for the Regime, the GOP and, especially, John W. McCain. Americans haven't been more dissatisfied with the country's direction since the poll started asking the question in the early 1990s.

In the poll, 81 percent of respondents said they believed that “things have pretty seriously gotten off on the wrong track,” up from 69 percent a year ago and 35 percent in early 2003.

Although the public mood has been darkening since the early days of the war in Iraq, it has taken a new turn for the worse in the last few months, as the economy has seemed to slip into recession. There is now nearly a national consensus that the country faces significant problems.

A majority of nearly every demographic and political group-- Democrats and Republicans, men and women, residents of cities and rural areas, college graduates and those who finished only high school-- say that the United States is headed in the wrong direction. Seventy-eight percent of respondents said the country was worse off than five years ago; just 4 percent said it was better off.

So why is this such bad news for McCain since they didn't even mention his name? Dissatisfaction peaks after a recession, not when we're just entering one. The Bush Recession is just getting ready to envelope Americans in a world of hurt-- and Americans know it and they know who to blame.

The poll found that Americans blame government officials for the crisis more than banks or home buyers and other borrowers. Forty percent of respondents said regulators were mostly to blame, while 28 percent named lenders and 14 percent named borrowers.

In assessing possible responses to the mortgage crisis, Americans displayed a populist streak, favoring help for individuals but not financial institutions. A clear majority said they did not want the government to lend a hand to banks, even if the measures would help limit the depth of a recession.

That was the key-- "favoring help for individuals but not financial institutions," the exact opposite of what McCain, who angrily calls the victims of his economic policies "irresponsible," is advocating. "Respondents were considerably more open to government help for home owners at risk of foreclosure. Fifty-three percent said they believed the government should help those whose interest rates were rising, while 41 percent said they opposed such a move."

Americans want more regulation to protect society from selfish, greedy and avaricious corporations. Deregulation has long been the heart and soul of Republican economic policy and it is the only economic tune McCain knows. McBush's moronic plan to "fix" the current financial woes are accelerated deregulation, the exact opposite of what voters-- and non-partisan economists-- want.

This morning the Times condemned, albeit too mildly, the Bush Regime plans to further jigger the economy in favor of their wealthy and powerful contributors and at the expense of regular folks, who, as always, are suffering most from the Republican economic agenda.

To understand the White House’s blueprint for regulating the financial markets, start with what the Bush administration did not do. It did not offer America a plan to respond to the ongoing credit crisis or to the Federal Reserve’s dramatic intervention to prevent the collapse of Bear Stearns. It certainly did not provide a roadmap for avoiding this sort of meltdown in the future.

The Fed’s role in the Bear debacle has put taxpayers at risk of having to shoulder big losses, but the administration’s so-called regulatory reform does not address what the Bear mess made obvious: if something goes badly wrong in under-regulated or unregulated corners of the financial markets, it could topple the whole system.

In fact, the blueprint was mostly developed before the current financial crisis and accordingly comes across as outdated. The message of the administration’s proposals is that the markets will-- and should-- return to where they were before the near-collapse of Bear Stearns. It’s doubtful whether many of its suggested policies would have been apt even in that earlier context. It’s indisputable that they are inapt now.

The editors point out that it will up to a (Democratic) Congress and to the next president to come up with the new rules for a 21st century regulatory system. A confused and ignorant old man from Arizona is the last thing needed in this mix. Republicans "are complicit in the credit crisis because the anti-regulatory ethos and practices of the administration fostered the conditions for the debacle. It’s difficult to solve problems of one’s own making and impossible to respond effectively if you don’t first face up to your role in causing them. The administration apparently prefers to perpetuate the myth of self-policing, self-correcting global free markets, rather than own up to the fatal flaws that are now so evident in that myth. In the end, Mr. Bush’s regulatory blueprint will allow him to leave office with that ideology intact-- in his mind at least. The real work will be left to others." The Times, which endorsed McCain in the Republican primary, never mentions that his voting record shows that he voted in favor of every single ideological attack against the regulatory system and that he's is exactly as responsible as all the other Bush Regime rubber stamps who the Times blames for the current disaster.


UPDATE: McCAIN HEATH CARE PLANS ARE PREMISED ON EVERYONE DYING AS SOON AS HE DOES

Tomorrow, Paul Krugman dissects Republican health care, or, rather, lack thereof. Elizabeth Edwards reminds McCranky that under his health care "plan," neither of them-- both cancer sufferers (people, like so many of us, with a dreaded pre-existing medical condition)-- would be eligible for health insurance. Krugman calls it a health care plan based on voodoo economics-- "not the supply-side voodoo that claims that cutting taxes increases revenues (though Mr. McCain says that, too), but the equally foolish claim, refuted by all available evidence, that the magic of the marketplace can produce cheap health care for everyone."

Insurance companies do try to hold down “medical losses”-- the industry’s term for what happens when an insurer actually ends up having to honor its promises by paying a client’s medical bills. But they don’t do this by promoting cost-effective medical care.

Instead, they hold down costs by only covering healthy people, screening out those who need coverage the most-- which was exactly the point Mrs. Edwards was making. They also deny as many claims as possible, forcing doctors and hospitals to spend large sums fighting to get paid.

And the international evidence on health care costs is overwhelming: the United States has the most privatized system, with the most market competition-- and it also has by far the highest health care costs in the world.

Yet the McCain health plan-- actually a set of bullet points on the campaign’s Web site-- is entirely based on blind faith that competition among private insurers will solve all problems.

BUSH HOPING TO TURN THE ECONOMY OVER TO ANOTHER "WARTIME PRESIDENT" WITH NO INTEREST IN IT

4 more years?

I'm sure you'll recall a few months ago John McCain blurting out angrily that he doesn't know (care) anything about economics-- but he could hire some people to take care of that stuff. He implied, strongly, that filthy lucre is beneath his dignity and that he has important wars to start and fight... so get the hell off his lawn. McCain is running for president for a set of reasons that have nothing whatsoever to do with any of the problems uppermost in most Americans' minds. He's very much like George Bush-- except Bush inherited his disregard for economics; McCain married into his.

In this morning's NY Times, Sheryl Gay Stolberg points out that in these calamitous and dramatic days for the economy, Bush, Coolidge-like, is largely offstage. Nor is he even backstage. He's flying around the world annoying national leaders with his sagging and failed agenda. Forget the glaring error in her first 3 words; her main point hits the nail on the head:

The first hint that President Bush might be detached from the nation’s economic woes was in February, when he conceded that he had not heard about predictions of $4-a-gallon gasoline.

Then Mr. Bush went to Wall Street to warn against “massive government intervention in the housing markets,” two days before his administration helped broker the takeover of the investment bank Bear Stearns.

While the Senate is hammering out a bill to ease the housing crisis, despite Bush's and, even more so, McCain's, laissez faire approach and while Fed Chairman Ben Bernanke was finally admitting that the country has "probably" slipped into recession, Bush wa pestering our European allies about Ukraine and Georgia joining NATO. (They turned him down, politely but firmly.)

For a man who came into office as the nation’s first M.B.A. president, Mr. Bush has sometimes seemed invisible during the housing and credit crunch. As the economy eclipses Iraq as the top issue on voters’ minds, even some Republican allies of the president say Mr. Bush is being eclipsed and is in danger of looking out of touch.

You think? He used to style himself the "CEO President," until some actual CEO pals of his started getting indicted, tried and convicted. After that he was always, always, always the "wartime president." McCain is eager to start out that way. The Bush Regime's economic policies-- the greed and selfishness agenda for multimillionaires-- which will also be McCain's economic policies, are the direct cause of what Bernanke called "a rough patch."

To the extent his plans to dismantle the New Deal reforms were successful, the economy has suffered mightily. To the extent his plans to redistribute the wealth of the country upward, there is a seething resentment against Republicans at every level of government. "[B]ecause the public has little faith in Mr. Bush, it may be tough for him to be the point man on the economy, even with a Harvard business degree. Just 25 percent of the public approves of the way Mr. Bush is handling the economy, a figure even lower than his overall job approval rating, a CBS News Poll in mid-March found." More accurate surveys found that only 14% of the public thinks he's doing a satisfactory job on the economy. Despite the fact that the public very much wants a leader right now, he's still resisting "calls from the House speaker, Nancy Pelosi, to hold a top-level bipartisan economic meeting to address the growing mortgage crisis." He's like Calvin Coolidge, waiting for Herbert Hoover to come on down and take over.

BUSH JOB APPROVAL RATINGS ON THE RISE! ALMOST A QUARTER OF AMERICANS THINK HE'S DOING A GOOD JOB

In early February the American Research Group polling found that only 19% of adults (18% of registered voters) approved of Bush's job performance. That was his lowest ever rating and I've been looking forward to single digits. Maybe it's a glitch but as of their latest poll (March 16-19), 24% of adults now approve of how Bush is carrying out his job. His disapproval rating didn't go down much though. In February 77% disapproved of him as President. Today only 75% disapprove. It's worse when it comes to the way he's handled the economy. His disapproval rating has risen-- from 79% to 80%.

Do you find it odd that his numbers are improving-- even if the approval numbers are still deep in the toilet? In February only 47% of adults felt the Bush Recession had kicked in. Today a staggering 66% know the economy is in recession-- and 42% feel the economy is terrible, up from 20% last month. ARG speculates on what caused the slight spike up. Republican partisans are rallying around their leader as the climate has turned more political and electoral. (Normal people still hate him.)

Increased approval among Republicans has moved George W. Bush's overall job approval to 24% according to the latest survey from the American Research Group. Those disapproving of the way Bush is handling his job and the economy remain at or near record highs for American Research Group polling during Bush's tenure in office as 86% of Americans say the national economy is getting worse and 66% say the national economy is in a recession.

...Among Americans registered to vote, 26% approve of the way Bush is handling his job as president and 73% disapprove. When it comes to the way Bush is handling the economy, 19% of registered voters approve of the way Bush is handling the economy and 78% disapprove.

In the February 2008 survey, 45% of Republicans approved of the way Bush was handling his job and 50% disapproved. In the latest survey, 72% of Republicans approve of the way Bush is handling his job and 26% disapprove. Bush did not receive the same turnaround among Republicans for his handling of the economy. In the February 2008 survey, 41% of Republicans approved of the way Bush was handling the economy and 54% disapproved. In the latest survey, 50% of Republicans approve of the way Bush is handling the economy and 44% disapprove.

ARG also released new polling numbers for the Senate race in New Hampshire. Although 20% of voters say they are undecided, Shaheen is leading Sununu 47%-33%. But even more painful for Sununu is that 61% of voters not affiliated with either party say they are voting for Shaheen, up from 41% in December. A Bush rubber stamp isn't what they're looking for the clean up the mess that Sununu actively participated in making.
As it starts sinking in that Iraq-- and the Bush-McCain escalation, euphemistically called "the surge"-- is failing, you can expect Bush's numbers to resume their downward path and you can expect shameless rubber stamps like Sununu to watch their own re-elect numbers tumble precipitously.

A cease-fire critical to the improved security situation in Iraq appeared to unravel Monday when a militia loyal to radical Shiite Muslim cleric Muqtada al Sadr began shutting down neighborhoods in west Baghdad and issuing demands of the central government.

Simultaneously, in the strategic southern port city of Basra, where Sadr's Mahdi militia is in control, the Iraqi government launched a crackdown in the face of warnings by Sadr's followers that they'll fight government forces if any Sadrists are detained. By 1 a.m. Arab satellite news channels reported clashes between the Mahdi Army and police in Basra.

The freeze on offensive activity by Sadr's Mahdi Army has been a major factor behind the recent drop in violence in Iraq, and there were fears that the confrontation that's erupted in Baghdad and Basra could end the lull in attacks, assassinations, kidnappings and bombings.

As the U.S. military recorded its 4,000th death in Iraq, U.S. officials in Baghdad warned again Monday that drawing down troops too quickly could collapse Iraq's fragile security situation.

McCain and his Cheney/Lieberman/Graham NeoCon posse are desperate to maintain the canard that the escalation is working. McCain was grabbing anyone who would listen and insisting it's all working out just the way he planned:

"We're succeeding. I don't care what anybody says. I've seen the facts on the ground," he screeched at reporters, a day after a roadside bomb in Baghdad killed four U.S. soldiers and rockets pounded the U.S.-protected Green Zone there, and a wave of attacks left at least 61 Iraqis dead nationwide.

McCain is unstable and now he's becoming unhinged.

COULD THE BUSH RECESSION TURN INTO A BUSH DEPRESSION?

I don't know anyone who thinks we're not in a recession and I don't know anyone who says we're on the brink of a Depression. Most people have no reason to think we won't have a Depression; they just think "it can't happen here" or "now" or "to me." It shouldn't either. Nor should have George Bush. The most unlikely of morons to assume the presidency he's done everything that anyone could do to bring on a financial calamity. This morning's Paul Krugman column, Partying Like It's 1929, gets right to the point: right wing ideology is toxic. The "banking crisis of the 1930s showed that unregulated, unsupervised financial markets can all too easily suffer catastrophic failure." Krugman claims the hard-learned lessons were "forgotten" as the decades passed. I'm less generous.

To the laissez fairies of the extreme right Krugman's carefully regulated and supervised financial markets are communism. Anything that impedes absolute greed and selfishness in pursuit of the general good is treason. And along came Bush and his merry band of agenda-driven Mayberry Machiavellis.

Krugman is so logical and generous in his understanding of how markets work. I don't think he used the words "greed" or "selfishness" once in his column-- or even implied the base instincts behind them. But that is what has driven us to the brink of disaster-- and he knows it. He explains what made a garden variety recession of 1929 into the Great Depression of the 1930s and how society-- or at least the New Deal (imagine only 17 Republicans in the 1937 Senate)-- dealt with it. "And we all lived happily for a while-- but not for ever after."

Wall Street chafed at regulations that limited risk, but also limited potential profits. And little by little it wriggled free-- partly by persuading politicians to relax the rules, but mainly by creating a “shadow banking system” that relied on complex financial arrangements to bypass regulations designed to ensure that banking was safe.

For example, in the old system, savers had federally insured deposits in tightly regulated savings banks, and banks used that money to make home loans. Over time, however, this was partly replaced by a system in which savers put their money in funds that bought asset-backed commercial paper from special investment vehicles that bought collateralized debt obligations created from securitized mortgages-- with nary a regulator in sight.

As the years went by, the shadow banking system took over more and more of the banking business, because the unregulated players in this system seemed to offer better deals than conventional banks. Meanwhile, those who worried about the fact that this brave new world of finance lacked a safety net were dismissed as hopelessly old-fashioned.

In fact, however, we were partying like it was 1929-- and now it’s 1930.

The financial crisis currently under way is basically an updated version of the wave of bank runs that swept the nation three generations ago. People aren’t pulling cash out of banks to put it in their mattresses-- but they’re doing the modern equivalent, pulling their money out of the shadow banking system and putting it into Treasury bills. And the result, now as then, is a vicious circle of financial contraction.

Mr. Bernanke and his colleagues at the Fed are doing all they can to end that vicious circle. We can only hope that they succeed. Otherwise, the next few years will be very unpleasant-- not another Great Depression, hopefully, but surely the worst slump we’ve seen in decades.

Even if Mr. Bernanke pulls it off, however, this is no way to run an economy. It’s time to relearn the lessons of the 1930s, and get the financial system back under control.

Problem is there's another lesson Americans haven't learned-- or have forgotten. Calvin Coolidge is about to finish his second term, the worst presidency ever. And too many Americans seem more than willing to vote for Herbert Hoover.

Interestingly, this morning's Washington Post reports on the long overdue re-evaluation of the over-hyped Alan Greenspan, a kind of financial markets J. Edgar Hoover. "Perhaps," Steven Mufson's article begins, "the Maestro composed some discordant notes after all." Not that he gave two craps about the non-rich, but the Post also reports on how his policies are-- predictably-- hurting the poor and middle class hardest. "Inflation is walloping Americans with low and moderate incomes as the prices of staples have soared far faster than those of luxuries. Overall, inflation may only been up by 4% from last year, but for staples like groceries, gasoline, health care and other basics it's approaching 10%. That's real inflation that hurts people who live on budgets.

The record of longtime Federal Reserve chairman Alan Greenspan -- worshipped by business leaders and dubbed "Maestro" in a 2000 biography by the Post's Bob Woodward-- is getting a critical look as his successor Ben S. Bernanke wrestles with problems that began on the Maestro's watch.

Many economists blame Greenspan for lax bank supervision and for keeping interest rates too low, too long from mid-2003 to mid-2004. That, the theory goes, fueled the housing bubble and spawned subprime and adjustable-rate mortgages for low-income people, vast numbers of whom can't make their payments now. Banks bought those mortgages in bundles that are worth far less than they originally were. That has led to big write-offs, shaking the entire financial system.

And I don't think continuing Bush's economic policies-- as McCain has already been doing-- is going to help do anything to solve any of the problems... at least not for America. McCain and Bush seem to think exporting American jobs abroad is sound policy. They're incorrect-- although the French might disagree with me:




UPDATE: OLD LINE GREED & SELFISHNESS REACTIONARIES ARE TURNING ON BUSH BIG TIME

Steve Forbes is fuming at the ineptness of the Bush Regime's response to what he calls a financial panic. "Not since Jimmy Carter has the U.S. had a President so oblivious to the damage done by an increasingly feeble greenback."

The Bush administration must take two steps immediately to quickly halt the unending, enervating credit crisis: shore up the anemic dollar and, for the time being, suspend "marking to market" those new financial instruments, such as packages of subprime mortgages.

The weak dollar is pummeling equities, disrupting the economy, distorting global trade and giving hundreds of billions of dollars in windfall revenues--through skyrocketing commodity prices-- to our adversaries such as Iran and Venezuela.

...The Federal Reserve can rally the markets for a day or two by finding some new mechanism through which to lend more money to banks and other financial institutions. But this is the proverbial Band-Aid for a patient who is beginning to hemorrhage.

IS THERE A SOLUTION TO THE UNDERLYING FINANCIAL MESS?

DLC's Bill Clinton joins GOP bloodsuckers to kill Glass-Steagall

I spent most of December and January in India and Southeast Asia. At the time I posted that their-- especially China's-- inflation was headed our way. The Bush Regime agenda has mandated it and the current financial policies are bringing it on even faster that I expected at the time. This morning's Washington Post dares to speculate that inflation is looming, although one wonders what the gargantuan increase in the cost of energy since Bush and Cheney took over (with the help of Big Oil) seems like if not inflation.

People were excited to see the Dow Jones soar yesterday because of another interest rate cut. A good day does not a healthy market make. Unfortunately, that is likely to help set off an inflationary spiral because by "reducing the interest rate financial institutions charge each other for short-term loans, the Fed makes money more readily and cheaply available. If it miscalculates, it can pump too much money into the economy, fueling excessive demand for goods, housing and capital spending-- and driving up prices... Through higher consumer prices, all Americans would effectively help pay for the rescue of the financial industry.

And the laws are written by the legislators bought and paid for by the banks and oil companies and lobbyists and those laws, which have gotten significantly worse in the past 7 years-- are meant to protect the ill-gotten gains of the authors of the current crisis, while penalizing the rest of us.

The threat of inflation was evident in commodity markets yesterday. Though at historically high levels, prices for corn and copper rose on the expectation that the Fed rate cut would breathe new life into the economy and avert a drop in demand. Oil prices jumped more than $3 in New York to $109.42 a barrel.

Commodity price hikes could translate into higher prices at gas stations and grocery stores. Airlines will be less likely to get relief. Yesterday Delta Air Lines offered voluntary severance payouts to about 30,000 employees, more than half its workforce, as it restructures to adapt to high jet fuel prices, among other problems it faces.

The Labor Department reported that the producer price index for finished goods rose 0.3 percent on a seasonally adjusted basis in February after a 1 percent increase the previous month. Food prices fell last month, while prices for consumer products, automobiles, prescription drugs and other goods rose.

...Lee Hoskins, former president of the Federal Reserve Bank of Cleveland, co-wrote a Forbes magazine piece that compared the current economy with that of the 1970s. "The Fed has abandoned the one thing it can truly control-- the long-run increase in price levels-- in a self-defeating attempt to keep the economy growing," he wrote. "Creating more dollar bills will not add to the nation's wealth, or make workers more productive."

And Hoskins is hardly the only economist worried about Bush Regime quick fixes. Last night former Federal Reserve Chairman Paul Volcker was interviewed on the Charlie Rose Show and this morning's Wall Street Journal has some sobering excerpts. He doesn't seem to think the Fed should be bailing out robber barons with our tax dollars.

Volcker: We’ve seen the Federal Reserve take more extreme measures in some respects than any that have been taken in the past to deal with a financial crisis, which raises some real questions about not only for the Federal Reserve and its authorities, but for the structure of the financial system… The Federal Reserve is designed to lend to banks. And the banks were considered to be at the center of the financial system, and lend liquidity, provide cash in return for good assets, when a bank got in trouble. Now they found in this case, where some of the investment houses were in trouble, and prototypically Bear Stearns … it’s lightly regulated by the SEC or some other, but not for the same reasons. They haven’t got the concern over the stability of those things….We’re going to lend to them and protect them, shouldn’t they be regulated?

Rose: Is it a wise precedent?

Volcker: Whether it’s wise or not depended upon how severe this crisis was and their judgment about the threat of demise of Bear Stearns. That’s a judgment they had to make and an understandable judgment. There is no question about it.

...Rose: Has [the economy] bottomed out, or have we seen the worst?

Volcker: Look. The basic economy is not irretrievably damaged in any way, shape, or form. We had to go through an adjustment, which is tough. It’s happening much quicker. You’d rather have it happen gradually. But I’m optimistic that, okay, we’ve got to get the consumption down, we got to get spending in line with our capacity to produce. I think that’s going on. And that process is going to take a while. If we can stabilize the financial market, we ought to come out of this. Then we’ve got a lot of work to do about what we do with the regulatory system, the supervisory system, what the role of the Federal Reserve is, what the role of the Treasury and the government is, because this is a different financial market.

You thought you wanted to have a beer with George W. Bush back in 2000? Now you're going to have to cut back on  what you consume. You know what that means? Think about it when you listen to the hateful rants by the Republican propaganda networks about Obama's preacher and Hillary's lesbian Arab lover or whatever crap they decide to throw at either one of them. They'll say and do anything to force a third George Bush term on us. Don't buy into it.

If you're having a hard time grasping the intracacies of all these economic news-- and who isn't?-- today's NY Times has a kind of a primer to make it almost easy enough for McCain and Bush to grasp.

The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford, and now they are falling behind on their mortgages.

But the overwhelming majority of homeowners are doing just fine. So how is it that a mess
concentrated in one part of the mortgage business-- subprime loans-- has frozen the credit markets, sent stock markets gyrating, caused the collapse of Bear Stearns, left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression?

I said almost easy enough for McCain and Bush to grasp. Bush is too stupid and disinterested and McCain is too pig-headed-- a classic know-it-all who will never learn anything-- but you can try to go through it. It isn't that hard. I read it and understood it and... it doesn't help figuring out anything in the real world that I can do to protect myself-- other than to not vote for any Republicans. But we all knew that already, didn't we?