The Three Essentials of Financial Reform

dollar-hand

As the White House unveils its long-awaited proposals to prevent another Wall Street meltdown in the future, keep a lookout for three essentials. Without them the Street will revert to its old ways as soon as the coast clears. In fact, now that the government has bailed out the Street, the biggest banks will take [...]

New Jobless Stats: Still “Less Terrible”? Not for Some

dismal-science

The Lex Column in the Financial Times got it right: “… ‘less down’ is now the new ‘up’ as media watchers search for stabilization in the overall market.” The writer was referring to the world of advertising where some analysts were putting a hopeful spin on revenue that fell 18% over the first three months [...]

The Great Debt Scare: Why Has It Returned?

broken economy

It’s the kind of thing I expect to hear from deficit hawks and chicken littles — from the self-described “fiscally responsible” right, from the scolds Ross Perot and Pete Peterson, from my former cabinet colleague Bob Rubin. But yesterday I was shown slides developed by the putatively liberal Center for American Progress intended to make [...]

“You Are Now the Owner of a Brand New Car (Company)!”

Walter Reuther

We now own a major stake in the largest auto company in the world. With the General Motors Corporation filing the second-largest industrial bankruptcy in world history, the US government has stepped in to take a 60% stake in the company and the autoworkers’ healthcare fund taking ownership of 17.5%. In a reversal of Aesop’s [...]

The Future of Manufacturing, GM, and American Workers (Part III)

Buick assembly line, 1950 (Photos Philip Gendreau)

As president of General Motors when Eisenhower tapped him to become secretary of defense in 1953, “Engine Charlie” Wilson voiced at his Senate confirmation hearing what was then the conventional view. When asked whether he could make a decision in the interest of the US that was adverse to the interest of GM, he said [...]

The Future of Manufacturing, GM, and American Workers (Part II)

knowledge-worker

Symbolic analysts have been hit by the current downturn, just as everyone else has. But over the long term, symbolic analysts will do just fine – as long as they stay away from job functions that are becoming routinized. They will continue to benefit from economic change. Computer technology gives them more tools for thinking, [...]

The Future of Manufacturing, GM, and American Workers (Part I)

auto-plant

What’s the Administration’s specific aim in bailing out GM? I’ll give you my theory later. For now, though, some background. First and most broadly, it doesn’t make sense for America to try to maintain or enlarge manufacturing as a portion of the economy. Even if the U.S. were to seal its borders and bar any [...]

Is Economic Growth a Delusion?

banks

Unemployment reached 8.5% in March of this year, but add in the once full-time, now part-time laborers, it may be as high as 15%. Yet my fellow rail commuters somewhere between New Haven and Grand Central Terminal think they smell recovery. As one salesman put it to me, “things will come back–even better than they [...]

Intellectual Monopoly Is an Unnecessary Evil

monopoly

In a rush to stimulate the economy, the Obama administration is touting various “visionary” plans to make the American economy more progressive, more innovative, and more forward-looking by subsidizing politically-motivated projects like “green” technology. These hands-on policies will be ineffective. Recent research suggests that a much more effective way to accomplish the same goals would [...]

A Modest Plan for Paying College Costs

falon_williams

I’m just about to head off to a commencement here at University of Califonria,  Berkeley. The news that keeps banging around in my head is that the state has just announced a whopping 9% increase in fees for next academic year, the third fee increase in three years. The average young person now graduating from [...]

The Truth Behind the Social Security and Medicare Alarm Bells

social-secuirty

What are we to make of yesterday’s report from the trustees of the Social Security and Medicare trust funds that Social Security will run out of assets in 2037, four years sooner than previously forecast, and Medicare’s hospital fund will be exhausted by 2017, two years earlier than predicted a year ago? Reports of these [...]

Arnold and Gavin: Using the Deficit to Scare Us

arnoldgavin

Everyone knows we’re in tough times with huge deficits – but there are few things more offensive than politicians using that to scare us. With the May 19th propositions sinking in the polls, Governor Arnold Schwarzenegger has threatened to lay off 1,700 firefighters during peak fire season if the measures fail. He’s even suggested that [...]

Sorry Folks: Happy Days Are Not Here Again

stressed-banks

“Demonizing the bankers as if they and they alone created the financial meltdown is both inaccurate and short-sighted,” Citigroup chairman Richard Parsons told reporters recently. “Everybody participated in pumping up this balloon and now that the balloon has deflated, everybody has some part in the blame.” Oh no we don’t. Talk about dissembling. The truth [...]

Obama and Pragmatism: Thinking Through Values

barack_obama2

I keep hearing the White House staff describe the President as a pragmatist. David Axelrod, one of his chief advisors whom I admire enormously, recently called him a “ruthless pragmatist.” Soon, I expect, he’ll be called a “take-no-prisoners pragmatist,” or perhaps a “remorseless, merciless, and unrelenting pragmatist.” I’m relieved the President is a pragmatist, but [...]

Connecting the Offshore Dots

denis

Rachel Maddow’s example on MSNBC was a simple enough explanation of how $21 billion dollars in annual tax revenue disappears from US coffers through legal loopholes that create tax shell corporations. Mr. Bill Hypothetical, based in Texas, earns $50,000 annually and pays a 25% tax rate. KBR’s profits, also based in Texas (a military contractor [...]

Why Obama is Taking on Corporate Tax Havens

loopholes

Why, one may ask, is Obama taking on yet another huge fight by taking aim at foreign tax havens? Yes, it’s unfair that multinationals pay an average tax rate of only 2 percent on their foreign revenues, and it’s unfair that some wealthy Americans are avoiding taxes altogether by parking their fortunes abroad. But, hey, [...]

The Auto Bailout Is Going Off the Road

chrysler

GM just announced it was laying of 21,000 more of its workers, as a means of assuring the Treasury Department the company is worthy of more bailout money. A Treasury official was quoted as saying approvingly that the goal is a “slimmed-down” GM. What? Having General Motors or Chrysler cut tens of thousands of jobs [...]

How Obama Can Succeed in the Next Hundred Days and Beyond

first-stone

Before Inauguration Day, President-elect Barack Obama said he wanted to hit the ground running. Instead, he hit the ground sprinting and hasn’t stopped. Consider: A $787 billion stimulus package. A 10-year budget including universal health insurance and a cap-and-trade system to combat global warming. Subsidies to help distressed homeowners stay in their homes. Public-private partnerships [...]

The Great Credit Card Battle To Come

credit-card-sharks

The next front in the banking wars will be over credit cards. Some of the nation’s biggest bankers — including representatives of Citigroup, JP Morgan Chase, and other recipients of billions of taxpayer dollars — are meeting today with the President to ask him back off his move to reform credit-card lending practices. What’s happening [...]

Messy Blond Dreadlocks of Grace

homeless

Late afternoon rush hour, Hollywood, this time of year — right after Easter, just a few days left of Passover. Moments after hugging my then 11-year-old goodbye and watching her dad welcome her to his seder, I already missed her. I was expected at a seder in the West Valley in about 40 minutes. With [...]

The Tea Baggers and the Bizarro Revolution

bizarroworld

The 2009 Tax Day “Tea Party” protests remind us of the stubbornness of Bizarro politics. On the cube-shaped Bizarro World, the backward planet of DC comic’s universe, a salesman hawks bonds “guaranteed to lose money for you” and the larger populace works towards imperfection. The code of opposites is the rule of the land. Greed [...]

Stimulus Mania: Is It The 21st Century Soup Line?

soupline

The efforts to jump start the economy in the United States, in hopes of causing a global ripple, have taken on an entirely new meaning as people and industry alike wait for the $787 billion dollar economic stimulus package to drop. It’s like a “mania” as so many cities, states, industries, school districts, homeowners, small [...]

Reporting From the Tea Bagger Hate-Fest in Sacramento

tea-bags

The hatred was palpable on the State Capitol’s steps. Hatred for taxes, hatred for government, hatred for state workers, hatred for teachers, hatred for Democrats, and hatred for all of the strawmen that leap from the imaginations of talk radio jocks. But the most hated figure of all at today’s “Tea Bag” anti-tax rally in [...]

We Can Stop Our Businesses From Moving Out

echo_park_murals

Long before I saw her walking her dog that morning or the guy who was jogging, or that couple move in down the street, I concluded that one way or another, my neighborhood was going to change. I just wasn’t expecting it so soon or for Black people to play such an active roll in [...]

We Need More Stimulus, Not More Bailout

patching panks

With only $110 billion remaining in the TARP bailout fund, all signs are that Tim Geithner is preparing to return to Congress seeking more bailout money. He’ll bring along the results of his bank “stress tests,” which will probably show many that big banks are still technically insolvent, along with bankruptcy scenarios for General Motors [...]

Nationalizing Banks and Industry: Why Capitalists Hate Socialism

worse-depression

The United States has always been a political economy, requiring government regulation of its finance and money markets, and using government stimulation on its labor force. “Free Market” enterprise is based on the notion that open markets and the competition derived from competing ideas for consumer patronage will create a market balance (equilibrium) that will [...]

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