Economy

Has Occupy Wall Street Affected Anything?

Peter Dreier at HuffPo has a cool graph showing how often the word “inequality” appeared in news coverage between October 2010 and October 2011. Guess what happens right about, oh, September 17 ? (Hat tip to Mother Jones ).

You Say Tomato, I Say Potato

Yesterday, The New Republic ’s Alec MacGillis arrived at the conclusion that Mitt Romney's famous flip-flopping and President Obama's pragmatism were one in the same: A politician who considers himself driven more by case-by-case pragmatism than any overarching philosophy, who likes to get all the smartest people in the room to hash out an issue, probing each side with questions and counters to arrive at some kind of workable middle ground. Does that sound familiar? I understand the temptation to make this argument, but it's off base. Obama’s pragmatism defines him. Every decision he’s made during his first term, from passing the stimulus to the intervention in Libya, evinces his belief that realism, data, and debate—not ideology—make for effective long-term policy. This pragmatism was present during the 2008 election, but Obama’s hopey-changey persona made his pragmatism easy to overlook and easier to decry later when he didn’t give his supporters all the legislative victories they...

Bravo Papandreou!

Greek Prime Minister Georgios Papandreou startled Europe and the financial world Monday by announcing that he will be calling a referendum on the terms of the latest deal negotiated by European leaders and bankers. What is the Greek leader up to? On one level, Papandreou is simply weary of being the agent of his own country’s economic destruction at the hands of bankers. He also is tired of the political unpopularity that comes with the role of broker of austerity. (AP Photo/Thanassis Stavrakis) Greek Prime Minister George Papandreou says his country will hold a referendum on a new European debt deal reached last week. But more important, Papandreou is resisting a double-cross already being cooked up by the bankers. He is playing the one card he has: If the bankers walk away from the partial debt relief committed in principle at the recent EU summit, Greece will default. And Papandreou wants that decision to be made, knowingly, by the Greek people and not by technocrats. Here is...

Half-Right Brooks

David Brooks’ column today is one of his better ones—noting that the U.S. is plagued by two kinds of inequality, that which divides the top one percent from everyone else, which is prevalent in our major cities, and that in smaller cities and rural areas, where college grads are doing OK but where the bottom has fallen out for those Americans who don’t complete college or, worse, high school. The gap between the lives of college grads and others has widened not just in terms of income but health, diet, marriage stability, and the percentage of children born and raised out of wedlock. Brooks isn’t the first conservative to have noted the disintegration of family life within America’s working class; Rich Lowry at National Review has also picked up on this. But neither Brooks, in today’s column, nor Lowry take the necessary further step of identifying what exactly has caused all this. If they want to take that step, they should check out the collected works of William Julius Wilson, the...

Limit Leverage!

The astounding thing about the collapse of Jon Corzine’s gambling venture, MF Global, is the revelation that his bets were leveraged at about 40 to 1. This is like playing poker and borrowing 97 percent of your stake. If you guess wrong on a big bet (as Corzine did), you are wiped out (as he was). The same thing happened to Lehman Brothers. This also shows how utterly feeble Dodd-Frank is and how little the system has changed since the collapse of 2008. The so-called shadow banking system—outfits like Corzine’s—can still bet the house if they have a taste for risk. The only good news was that at $8 billion, Corzine’s MF wasn’t big enough to take down the system or require a government bailout. But it could have been. As a regulatory matter, it would not be difficult to limit all kinds of leverage for any financial institution to, say, 10 to 1. And the more risky the kind of institution and its strategy, the more leverage should be limited. You could require all financial institutions...

The Ties That Blind

A belief in American pull-yourself-up-by-your-bootstraps mythology lies at the heart of conservative attacks on the 99 percent.

Flickr/LianaAn
When the Canadian activist magazine AdBusters issued a call on its listserv to start the Occupy Wall Street demonstrations in New York and other cities, a couple of like-minded protesters created a companion blog on Tumblr called “We are the 99 percent.” The purpose of both the protests and the blog was to point out that the bottom 99 percent have been subsidizing the very rich and their wealth-multiplying experiments for decades. But the blog did something the protests didn’t: It allowed folks who couldn’t camp out in Lower Manhattan and risk arrest to participate. Contributors upload pictures of themselves holding handwritten notes that tell their stories of disenfranchisement, insolvency, and unfair workplace practices. Each note varies, but overall, the blog depicts an economy in decline and the people pushed down to the bottom as a result. Not to be outdone, conservatives launched their own Tumblr with the same aesthetic. “We are the 53 percent” co-creator Erick Erickson, a CNN...

For Europe, High Stakes in Greece

Stabilizing one teetering economy won't end the eurozone's dance of death.

(Flickr/Oscar Alexander)
T he problems of the euro turned critical when the Greek government nearly defaulted in May 2010 and the International Monetary Fund and European Union agreed to a bailout. In truth, the 17-nation euro area had deep troubles long before that. Its oversized and undercapitalized banks, its common monetary policy but diverse and fragmented fiscal policies, the persistent economic imbalances among nations that use the euro, and a cumbersome decision-making structure all made the euro-area economy vulnerable. The crisis, which still bears the mark of the Greek tragedy that first set it off, has now spread far beyond Greece. The euro was created for normal times, but the EU lacked good mechanisms for crisis management. At every step of the Greek drama, policy-maker responses have remained behind the curve of economic deterioration. Slowly but surely, this erosion of confidence ensnared other countries, such as Ireland and Portugal, then spread to Spain and Italy, both perceived to be...

Foreclosed for Business

Before the Republican presidential primary debate in Nevada, 2012 GOP frontrunner Mitt Romney told the editorial board of the Las Vegas Review Journal that government shouldn’t be in the business of trying to help families about to lose their homes. “ Don’t try and stop the foreclosure process ,” he said. Former pizza magnate Herman Cain claimed following the debate that the best way to help homeowners facing foreclosure is to “ get government off the back of the banks .” Former Speaker of the House Newt Gingrich’s prescription for aiding homeowners, meanwhile, is to repeal the Wall Street reform law that Congress passed last year. Listening to the GOP presidential candidates, you’d never know that Nevada was the state hardest hit by the bursting of the housing bubble, that it has led the nation in foreclosures for 56 consecutive months , or that last year one in nine Nevada households received a foreclosure notice. The one time that foreclosures came up during the debate, none of the...

Obama's Wheel and Deal

The administration's recent trade agreement with Korea, Colombia, and Panama is expected to destroy more than 200,000 American jobs.

President Barack Obama stands after signing the Korean Free Trade Agreement in the Oval Office of the White House in Washington, Friday, Oct. 21, 2011. He is joined by, from left, Korean Ambassador Han Duk-soo, Commerce Secretary John Bryson, DOW Chemical Company CEO Andrew Liveris, Boeing CEO Jim McNerney, US Trade Representative Ron Kirk, Rep. Dave Camp, R-Mich., Xerox CEO Ursula Burns, Korean Alliance for Free Trade William Hwang and Correct Craft, Inc., CEO William Yeargin. (AP Photo/Susan Walsh)
(AP Photo/Susan Walsh) President Barack Obama stands after signing the Korean Free Trade Agreement in the Oval Office of the White House. A s he gears up for a difficult re-election campaign, President Obama risks losing key swing states that he won in 2008 because of a recent flip-flop on trade commitments. Back on the campaign trail, Obama had committed to a new approach to trade deals that would protect the environment, boost manufacturing, and protect food safety. That was then; this is now. On October 12, he shoved through three NAFTA-style trade deals with Colombia, Korea, and Panama that are officially projected to increase the U.S. trade deficit and cost tens of thousands of American jobs. These deals were negotiated and signed by George W. Bush in 2007, but had not been formally approved by Congress. While Wall Street and the Chamber of Commerce applauded the deals, Obama’s base and most congressional Democrats opposed them; the GOP provided almost all of the votes for...

On Borrowed Time

President Obama's new student loan plan isn't enough to help students saddled with debt.

AP Photo/Ed Andrieski
On Tuesday, the Obama administration announced its new plan for student loans: new graduates can cap their student loan repayments to 10 percent of their monthly income. After 20 years, their debt will be forgiven. Graduates already repaying their loans can consolidate and get half a percent interest rate cut. These changes will go into effect next year, two years before they were already scheduled to do so, and the administration said the move was in response to an online petition drive on its “We the People” site. The high student-debt burden—it will reach $1 trillion this year—is also a centerpiece of the Occupy protests around the country. The loan plan is clearly a move to ignite college student and recent graduate support, and it’s also a change President Obama doesn’t have to go through Congress to enact. All of which makes this move understandable from a political standpoint. The problem is that it actually doesn’t do much to help students. The administration and others will...

A Scary Guide to the GOP Tax Plans

When did tax-reform plans become so sexy? It seems like every day now GOP candidates are flaunting a new, slimmer tax plan, complete with a catchy name and nonsensical (or nonexistent) ideas supporting them. After a while, they can all start to look the same, but they vary widely on the craziness spectrum. Homeland Security decided that colors are passé as a way to measure threat, so here is my patented Herman Cain “I am America” smile threat level system. The Baseline: There are some basic conservative calling cards that the GOP tax plans share. They would all eliminate the 15 percent capital gains tax (Mitt Romney would only eliminate the tax for families making less than $200,000 a year) and the estate tax, and all the candidates have vowed to repeal the Affordable Care Act and Dodd-Frank. If your only source of news for the past couple of weeks has been the GOP debates, you would think that these were the two most dangerous pieces of legislation ever to be passed in the United...

Europe Buys Some Time

The stock market liked the European deal that was announced in the wee hours of Thursday morning. At this writing, the Dow is up 268 points. But the market, as is so often the case, could well be wrong. For starters, this is not yet a done deal. The European leaders agreed that the banks will take "voluntary" losses of about 50 percent on their holding of Greek bonds, so that the Greek economy can gain some room to breathe—but the banks did not agree. Charles Dallara, who heads the international bankers' lobby, the misnamed Institute for International Finance, was quoted by The Wall Street Journal as saying that "there is no agreement on any element of a deal." He later told CNBC that the deal was "voluntary," permitting issuers of credit-default swaps (mostly banks) to avoid payments they would have to make in the case of a formal restructuring or a default. But never underestimate the ability of banks to impose their losses on somebody else. Under the proposed deal, the banks also...

What Americans Make

Last Friday, the Social Security Administration released its figures on how much money Americans made in 2010 from wages, salaries, and tips (but not from capital gains, dividends, or rents). Turns out that the 150,398,796 Americans for whom employers issued W-2 forms made just over $6 trillion in net compensation. If you calculate the raw mean average, that comes out to $39,959.30 per worker. But 66 percent of wage earners actually made less than that (or that amount exactly)—which means, the high level of pay for upper-income workers produced a much higher mean average than the average American worker actually makes. The median wage—the dollar amount that 50 percent of wage earners made more than, and 50 percent made less than—was $26,363.55. Twenty-six thousand bucks is what the average American worker makes on the job. That’s right in line with the figures for median household income, which hover around $49,000 once you total the income for everyone at home who has a job. To be...

The GOP's Broken Record

For the eight years of the George W. Bush presidency, economic policy in the United States had as its lodestar the view that we needed to lower taxes. Liberals objected that Bush-era tax-policy proposals were regressive, tilting the majority of their benefits to high-income taxpayers who had the least need for additional funds. The retort at the time was that this was a misleading way to think about it: The lower taxes weren't simply designed to bolster individual incomes; they were supposed to bolster overall economic growth. Higher growth rates would result in higher incomes for people up and down the economic ladder. The results of this policy have been disappointing, to say the least. Even those who claim that the economic health of the middle class is being understated are producing charts that show ten years of flat incomes for the median American household . In response, Republican presidential candidates are uniformly proposing new rounds of regressive tax cuts. The right's...

Rick Perry Promises Four Years of Abysmal Job Growth

Texas Governor Rick Perry has released his first television ad, and in it, he makes a big promise. “As president, I will create at least 2 and half million new jobs.” The problem, as Steve Benen points out , is that this is a lot less impressive than it sounds. Since the recession officially ended a year and a half ago, the economy has added 2.56 million private-sector jobs . Unfortunately, thanks largely to public sector layoffs, net job growth comes to 2.1 million jobs. Even still, President Obama’s record of 2.1 million jobs in eighteen months – lackluster as it is – is far preferable to Perry’s promise of 2.5 million jobs in four years.

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