Today—the same day that New York’s Mayor Bloomberg had his cops clear Zuccotti Park—Richard Fisher, the president of the Federal Reserve Bank of Dallas, called for breaking up America’s biggest banks, calling them “too dangerous to permit.” Also today, Warren Buffett, in an interview posted on the Business Wire of Berkshire Hathaway, his company, continued his criticism of American plutocracy. “Through the tax code, there has been class warfare waged, and my class has won,” Buffett said. “It’s been a rout. You have seen a period where American workers generally have gone no place, and where the really super rich as a group increased their incomes five for one in this rarified atmosphere.”
It was a busy weekend in Italian politics. The Chamber of Deputies passed the latest round of austerity measures, Prime Minister Silvio Berlusconi resigned, and President Giorgio Napolitano mandated Mario Monti, a respected economist and former EU commissioner, to form of a new government of national unity. The backdrop to all this frenzied activity was the country’s growing liquidity crisis: As Italy, the world’s third largest bond market, saw its borrowing costs rise to unsustainable levels in recent weeks, the rest of the planet could only watch in numb horror, as if observing a slow-motion car crash.
The recession officially ended nearly two and a half years ago, in June 2009, but for the generation of young adults who’ve been trying to take their first steps into adulthood, its effects could shape the future for decades to come.
Beware of overseas orphanages seeking donations. If you're not careful, you may become the victim of an orphanage scam—in which a savvy entrepreneur in a poor country hustles up some children so that he or she can ask developed-world humanitarians for money for the children's support. In some of the notorious cases, the orphanage director pockets the money while the children are left to starve or sold for sex. Few people know that they may be underwriting kidnapping or other modes of defrauding local families out of their children.
It’s clear that the markets don’t want Silvio Berlusconi to continue as Italy’s prime minister. They were cheered yesterday, briefly, when word got around that Berlusconi was stepping down, then subsided into their accustomed grumpiness when he denied it. (We know this by following the interest rates on Italy’s bonds, which are soaring, save during the brief moment when it was thought Berlusconi’s departure was nigh.)
Don’t miss The Washington Monthly’s article Taxing the Kindness of Strangers, in which a couple of bleeding-heart, middle-class liberals take in a foster care child—and discover the exhaustion and humiliations of trying to get the services the child needs.
In a way that we never really anticipated, welcoming Sophia into our home led us into the wilderness of red tape and frustration navigated every day by low-income parents who struggle to raise children with the critical help of government programs …
Last Thursday, I attended a conclave, sponsored by the Frederich Ebert Foundation, of about 20 American liberals (chiefly economists and union representatives) and 20 German social democrats (economists, unionists, Social Democratic Party officials, and a couple of stray businessmen) to see what we could learn from each country’s respective economic, social, and political arrangements. Early on, one German friend posed a question to us Americans: “Where’s your [i.e., America’s] learning curve?”
On October 27, after a 15-year fight, a federal judge approved a $1.25 billion settlement to black farmers discriminated against by the United States Department of Agriculture (USDA). In 1997, hundreds of farmers filed a class-action suit, in the case Pigford v. Glickman, alleging pervasive discrimination of black farmers by the USDA between 1981 and 1997. For decades, the department, which regularly gives loans to farmers to keep their business afloat, had refused loans to black farmers while awarding greater loans to white farmers of equal standing. Because of an inability to receive loans, many black farmers were forced to forfeit their farms or operate on a smaller scale. In 1999, the judge demanded a settlement for those with claims.
In 2005, when Local 6 won its first union contract at the boutique Time Hotel on West 49th Street, Angel Aybar, then a 21-year-old room attendant responsible for checking, cleaning, and restocking minibars, not only got a raise from $10 to $16.50 an hour; he became a member of a uniquely effective health plan. The New York hotel workers’ plan provides comprehensive coverage at its own health centers, including full dental and optical care, with no deductibles or co-pays and a core philosophy that emphasizes primary care, wellness, and prevention. Aybar even credits the health plan for his marriage.
Tomorrow, Ohioans will vote on Issue 2, a referendum to repeal an anti-union law that threatens to destroy public-sector unions in the state. Last spring, the governor and majority-Republican legislature passed Senate Bill 5, restricting public unions' ability to strike, collectively bargain with employers, and collect dues. In response, state Democrats and unions put the law on the ballot. Going into tomorrow's vote, it looks like labor will pull it off. A new survey from Public Policy Polling shows 59 percent of voters plan to reject SB 5 on Tuesday, while only 36 percent of voters will vote to approve it. It would be an immediate victory for workers' wages and job stability. As a crucial swing state, the win for labor also bodes well for Democrats in the 2012 elections.
We learn from Samuel Brittan’s column in the Financial Times today that when Winston Churchill was the U.K.’s chancellor of the exchequer in 1925, he wrote in a letter to a British Treasury official that he’d like to see “finance less proud and industry more secure.”
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).
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.
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.