Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. We're Not All Friedmanites NowFrom Thomas Frank's WSJ column last week, unrest at the University of Chicago over the soon-to-be unveiled Milton Friedman Institute:We're Not All Friedmanites Now By Thomas Frank Once upon a time there was a master narrative, and a neater little theory-of-everything you never did see. In its 19th century heyday it rationalized the having of the haves and commanded the deference of the have-nots; it spoke from the pulpit, the newspaper and the professor's chair. Its name was market, and to slight it in even the smallest way was to take your professional life into your hands. In 1895, the economist Edward Bemis found this out when he was dismissed from John D. Rockefeller's University of Chicago thanks to his "attitude on public utility and labor questions," as he put it in a letter to Upton Sinclair. Professors elsewhere paid the same price for intellectual independence. But the orthodoxy lost its power of life and death. Academia developed protections for scholars who pursued unpopular ideas. Rockefeller's University of Chicago went on to become the pre-eminent research university in the land, a temple of free inquiry and a magnet for Nobel prizes. I studied there and loved its atmosphere of endless debate. -snip- What ought to alarm us, though, is the Milton Friedman Institute's apparent plan to transform free-market orthodoxy into a bankable intellectual product. What is evidently going to reel in the dollars here is not research but ideology. Labels: Free Market, Milton Friedman, University of Chicago Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Obama Tilt Toward RubinomicsThis is from Bloomberg.com; hat-tip to Doug Henwood of Left Business Observer.Obama Tilt Toward Rubinomics Stirs Warning From Organized Labor Read the rest of the article. Labels: Doug Henwood, labor, Left Business Observer, Richard Trumka, Robert Rubin Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Bill Black on McCain on Fox NewsWilliam K. Black, who wrote the cover story of our November/December issue, (Mis)Understanding a Banking Industry in Transition, was interviewed for a Fox News special on John McCain's role in the "Keating Five" scandal, which was the major political fallout of the savings & loan scandal. The special will air at 8pm on Tuesday, August 19th (but check your local listings to see exactly when it will air.) He was also interviewed for a CNN special on the same topic.McCain's central (negative) role in that scandal has been underreported in this year's presidential election, so this coverage by Fox and CNN is most welcome, especially if Bill Black can provide his perspectives. As we mentioned on the D&S blog in February, Bill played a central (positive) role in that scandal:
Click here and here for earlier postings on Bill Black, McCain, and the S&L crisis. The Fox special will apparently be a one-hour documentary on McCain that "looks at the character and conduct of the candidate, both pro and con"; a subsequent one-hour Fox News documentary on Obama will examine "the tragedies of his early years, growing up with his grandparents and going to college, his job as a community organizer and later as a Harvard Law School student and Illinois legislator," according to the Hollywood Reporter. Labels: Bill Black, CNN, Fox News, Freddie Mac, john mccain, Keating Five, savings and loan crisis, William K. Black Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Great Crash of 2008, by Mason GaffneyThis crash is The Big One; it has signs of becoming a Category 5. How do we know? We've "been there and done that" so many times before, roughly every 18 years over the last 800 or more. Major wars and, rarely, plagues have broken the rhythm, along with the little ice age, reformation and counter-reformation, political revolutions and reactions, the rise of nation-states, the enclosure movement, the age of exploration, massive European imports of stolen American gold, the scientific and industrial revolutions, the Crusades, Mongol and Turkish invasions, and other upheavals. Yet, the endogenous cycle keeps returning, as soon as we find peace, and economic life returns to its even tenors. What President Warren Harding famously called "normalcy" soon evolved into another boom and a shocking bust, as so often before. Calm and routine prosperity has never been man's lot for long: it somehow leads to its own downfall, cycle after cycle. Follow the link to read on... Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). John Miller on the RadioEconomist and Dollars & Sense columnist John Miller is on the radio--on the program Justice or Just Us? on KUCI in Irvine, Calif. He's talking about the recent GAO report showing that many corporations pay no taxes at all in the United States.John's latest Up Against the Wall Street Journal column, just posted to the D&S website, is on cap-and-trade programs: "For the Wall Street Journal's editors, fear of a bigger government outweighs the fear of a warmer planet." Labels: cap-and-trade, corporate taxes, GAO, John Miller, Wall Street Journal Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Economists' Letter on Offshore DrillingSee below for information about how to add your signature to this letter.Senate Majority Leader Harry Reid Senate Minority Leader Mitch McConnell House Speaker Nancy Pelosi House Minority Leader John Boehner Dear Senators Reid and McConnell and Representatives Pelosi and Boehner, As economists, we write out of concern that you are being pressured to lift the Congressional ban on most oil drilling off our coasts, despite the fact that this would do nothing in the short term and almost nothing in the long term to reduce gas prices. Simpler measures that don't threaten our environment would do much more. The federal government's Energy Information Administration projects that this would have no impact on gas prices in the near-term since it will be close to a decade before the first oil could be extracted. The EIA projects production would reach 200,000 barrels a day at peak production. It describes this amount as too small to have any significant effect on oil prices, even when production is at its peak. [1] If the US had raised auto fuel efficiency standards between 1985-2005 by a quarter of the amount it raised them annually from 1980-1985, instead of leaving them virtually unchanged, the result would roughly have been the equivalent of 3.3 million barrels of oil per day in new production,16 times the projected impact of offshore drilling. [2] It is reasonable to assume that modest increases in fuel efficiency in the future would have a similar effect. If we negotiated an agreement with Iran that led to the lifting of US sanctions, oil production in Iran could increase 1-2 million barrels a day. That would be 5-10 times the projected impact of drilling off our coasts. U.S. oil companies are not doing all they can do boost production. In May, the Washington Post reported that Exxon had spent $8 billion buying back shares in the first quarter as a way to boost the value of the stock for shareholders. That far exceeded the company's $5.5 billion capital spending budget.[3] In 2006, Exxon spent $25 billion buying back its stock, again more than its capital spending budget. [4] The industry spent $52.4 billion on stock buybacks in 2006, nearly double the amount in 2005. [5] It would be far better to pursue modest conservation and negotiations with Iran, having the effect of bringing 20-25 times as much oil on the market, rather than endanger tourism, fishing, and beaches on our coasts for a long-term effect on gas prices that we won't even notice. Thank you for your consideration of our concerns. Michael Perelman, Economics Dept., California State University, Chico James Devine, Economics Dept., Loyola Marymount University, Los Angeles Hadi Salehi Esfahani, Economics Dept. University of Illinois, Urbana Mark Weisbrot, Center for Economic and Policy Research, Washington Rudy Fichtenbaum, Economics Dept., Wright State University, Dayton, Ohio Michael Brun, Economics Dept., Illinois State University, Bloomington-Normal Hank Leland, Research Analyst, SEIU, Washington Edward S. Herman, Finance Department, Wharton School, University of Pennsylvania Jeffrey Stewart, Economics Dept., University of Cincinnati Laurence Shute, Economics Dept., California State Polytechnic University, Pomona References: [1] Annual Energy Outlook 2007 with Projections to 2030, Energy Information Administration, February 2007. [2] Offshore Drilling and Energy Conservation: The Relative Impact on Gas Prices, Dean Baker and Nichole Szembrot, Center for Economic and Policy Research, June 2008. [3] "Up $10.9 Billion, Exxon Worries About New Tax," Steven Mufson, Washington Post, May 2 2008. [4] "Higher Oil Prices Help Exxon Again Set Record Profit, " Steven Mufson, Washington Post, February 2, 2007. [5] "Big Companies Put Record Sums Into Buybacks," Ian McDonald,. Wall Street Journal, June 12, 2006. Please send signatures to naiman--at--justforeignpolicy.org, with subject line: sign economists letter. Please include some affiliation broadly consistent with the notion of "economists' letter." Deadline: end of day Friday August 15. Robert Naiman Just Foreign Policy www.justforeignpolicy.org naiman--at--justforeignpolicy.org Labels: offshore drilling, oil, oil prices Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Beijing Olympics by the NumbersWe just posted a web-only article on the Beijing Olympics that explains why global corporations are salivating while more than 1.5 million people have been displaced. The Geneva-based Centre on Housing Rights and Evictions has documented the massive displacement that "mega-events" like the Olympic Games regularly cause, but the Beijing games have far outpaced its predecessors.Please also check out Julie Hollar's excellent article, Carrying a Torch for Anti-China Protests, from the most recent issue of Extra!. "For once, mainstream media have found an anti-government protest to embrace," Hollar explains. The same media outlets that barely registered antiwar protests over the past few years fell over themselves to cover the most minute details of the pro-Tibet protests interrupting the Olympic torch relay. Why? Because China is an "official enemy." (The whole issue is great--but Extra! always is, ioho.) Labels: Beijing, COHRE, Extra/FAIR, Olympics Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Now Wall Street Wants Your Pension, TooJPMorganChase, Citi, Cerberus, and Morgan Stanley are among the firms lobbying Washington to let them take over and run corporate pension funds.[Hat-tip to Ira Glazer on lbo-talk for alerting us to this article.] by Matthew Goldstein | BusinessWeek | August 8, 2008 The folks who brought you the mortgage mess and the ensuing hedge fund blowups, busted buyouts, and credit market gridlock have another bold idea: buying up and running troubled corporate pension plans. And despite the subprime fiasco, some regulators may soon embrace Wall Street's latest scheme. The Treasury Dept. on Aug. 6 offered a blueprint for lawmakers on Capitol Hill to allow "financially strong entities in well-regulated sectors" to acquire pension plans , after the IRS ruled that the concept needed legislative approval. "The Administration's proposal says these deals should only be permitted when the acquiring entity has a higher credit-rating than the seller," says Charles Millard, director of the Pension Benefit Guaranty Corp. (PBGC), the federal insurer of last resort of corporate pension plans. "Such a transaction creates greater security for retirees and the pension system." The issue will now, no doubt, move to Congress after the election. In preparation for that moment, the world's biggest big investment banks, insurers, hedge funds, and private equity shops have been quietly laying the groundwork for such deals over the past year. They would be a big prize for Wall Street. The $2.3 trillion pension honey pot has $500 billion in "frozen plans" that are closed to new employees and whose benefits are capped, including those at IBM IBM, Hewlett Packard (HPQ), Verizon (VZ), and Alcoa (AA). And that figure could triple by 2012, according to consulting firm McKinsey. By managing those troubled plans, Wall Street also gains entrée to an appealing set of customers to whom it can sell a broad array of fee-generating products. "We have identified several clients who would be willing to be first to sell a plan," says Scott Macey, a senior vice-president at Aon Consulting. "But the question is, when is a good time for this?" The concept of off-loading pension funds sounds great. For businesses it's a chance to rid themselves of struggling plans, which can weigh down a balance sheet. It's especially good timing now. New accounting rules take effect in the next year or so that will require companies to mark their pension assets to prevailing market prices each quarter—a change that could devastate some companies' profits. Meanwhile, many companies no longer want to pay for pensions, troubled or otherwise. A recent report from the U.S. Government Accountability Office found that most companies freeze their pension plans merely to avoid "the impact of annual contributions to their cash flows." But the gambit to turn pensions into for-profit enterprises raises troubling questions. Critics, including some on Capitol Hill, worry that financial firms don't have workers' best interest at heart, which would put some 44 million current and future retirees at risk. "We think it's just a terrible idea," says Karen Friedman, policy director for advocacy group Pensions Rights Center. "In the wake of the subprime crisis, it would be crazy to allow financial institutions to manage these plans." Read the rest of the article. Labels: pensions, subprime crisis, Wall Street Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). A Tale of Two PollsPoll: Nearly half hearing too much about ObamaWed Aug 6, 10:47 AM ET WASHINGTON - Barack Obama may be the fresh face in this year's presidential election, but nearly half say they're already tired of hearing about him, a poll says. With Election Day still three months away, 48 percent said they're hearing too much about the Democratic candidate, according to a poll released Wednesday by the nonpartisan Pew Research Center. Just 26 percent said the same about his Republican rival, John McCain. Read the rest of the article. More Peruvians Favor Socialism Than Capitalism by Steve Crabtree WASHINGTON, D.C. -- A simple contradiction helps illuminate growing political tensions in Peru: About half of Peruvians (49%), according to a 2007 Gallup Poll in the South American nation, say they personally are more socialist than capitalist in their attitudes, while just 16% say they are more capitalist than socialist. However, 45% of Peruvians view their country as more capitalist than socialist, while just 24% say it is more socialist than capitalist. Garcia's political weakness has made him vulnerable to attacks from populist leaders in the country's southern Andean region, an area that has failed to see much of the economic progress enjoyed further north. Hernan Fuentes, head of the Puno region in the south, regularly criticizes Garcia's economic liberalism, favoring the "socialist nationalism" model exemplified by Venezuelan President Hugo Chavez. Populist former army officer Ollanta Humala, who narrowly lost the 2006 presidential election to Garcia, also has a political stronghold in the south. Read the rest of the article. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Companies Tap Pension Plans To Fund Executive BenefitsExcellent reporting on the front page of today's WSJ:Companies Tap Pension Plans To Fund Executive Benefits Read the rest of the article. Labels: executive pay, pensions, Wall Street Journal Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Banks and Private EquityA good editorial from today's New York Times, cautioning against private equity firms' efforts to get the Fed to relax bank ownership regulations. The current issue of Dollars & Sense includes a feature article by a former industry insider that exposes how an already favorable regulatory landscape allows private equity firms to reap megaprofits at the expense of the companies they buy and sell and the communities that depend on them.The Banks and Private Equity Labels: banking regulation, New York Times, private equity, The Fed Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
