Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Bernanke, Time, Senate Banking CommitteeWell the New York Times website is reporting that the Senate Banking Committee just approved Ben Bernanke for a second term as Fed chair.This comes just after Time magazine announced that Bernanke is its Person of the Year for 2009. We know that this designation doesn't necessarily mean that the magazine endorses the person in question (remember Hitler?). But here's how the announcement describes Bernanke: A bald man with a gray beard and tired eyes is sitting in his oversize Washington office, talking about the economy. He doesn't have a commanding presence. He isn't a mesmerizing speaker. He has none of the look-at-me swagger or listen-to-me charisma so common among men with oversize Washington offices. His arguments aren't partisan or ideological; they're methodical, grounded in data and the latest academic literature. When he doesn't know something, he doesn't bluster or bluff. He's professorial, which makes sense, because he spent most of his career as a professor. Ok—fair enough. Bernanke is a nerdy, professorial type. But non-ideological? We beg to differ. I asked Jerry Friedman, who wrote Bernanke's Bad Teachers for our July/August issue, to give us his reaction to Time's announcement. Here's what he had to say: In picking Ben Bernanke as Person of the Year, Time Magazine recognizes the man responsible for the little good and much bad that has characterized policy the worst economic crisis since the 1930s. When President George W. Bush appointed him to succeed Alan Greenspan as head the Federal Reserve, Bernanke was Chair of the President's Council of Economic Advisors and an acknowledged acolyte of Milton Friedman. Like Friedman and Greenspan, Bernanke believes in "Say's Law" or the principle that individual action through markets will eliminate unemployment. To Bernanke, the current crisis was caused by government mistakes, particularly the misalignment of currencies and the subsequent Chinese savings glut which, when it flowed into the United States housing market, led to an unsustainable real-estate boom. To address the subsequent financial crisis, Bernanke has been willing to move very aggressively but his actions have stopped with the Wall Street bailout because he sees no broader ramifications of the crisis. Confident in free-market capitalism, there is, for Ben Bernanke, no problem with free capital markets, no concern that growing income inequality or changing industrial policy may be undermining effective demand, and no reason, therefore, to revisit the conservative and pro-business policy decisions made during the neo-liberal era that began in the 1970s. This is the man Time says is not ideological? Hmm... Maybe the analogy is not Hitler being named "Man of the Year," but Obama winning the Nobel Peace Prize... Labels: Ben Bernanke, Gerald Friedman, Hitler, Senate Banking Committee, Time magazine Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). What Kind of Reporting Do We Deserve?A nice plug for D&S over at Counter Economics blog, where the main blogger is an e-subscriber to D&S. He singled out for praise Jerry Friedman's article Bernanke's Bad Teachers, which we just posted to the website.What Kind of Financial and Economics Reporting Do We Deserve? The differences between conventional media and the publication Dollars and Sense on the topic of economics and the present economic crisis is stark. From the conventional media the topic of the biases and corruption of our policy shapers such as Bernanke, Geithner and Summers is never brought up. According to the conventional media they are simply "public servants"; Alan Greenspan was one of the top economists when selected to head the Fed (which he never was), and Bernanke is a deep thinking scholar of the depression, who is providing the best lessons from that crisis to this one. What we are not supposed to notice is that all of these economists belong to a country club of the elite and are part of interlocking directorates. The only thing deep about them is the deep corporate welfare and consistently pro-financial industry approach to every single policy decision. As Larry Summers is paid $5 million a year to do a few hours a week of influence peddling for a hedge fund, and the other decision makers are similarly on the take, their first question is always the following: "How can we further enrich investment banks in particular and the financial industry generally. Secondly, how can we spin it so it sounds good to the average person" Every article and television debate is centered around the same philosophy. In order for the country to do well, Citibank absolutely must be able to charge 20% interest. Any deviation from this is simply the first step on the "road to socialism." The bias is so deep that during discussions of unfair credit card practices, the typical show moderator will offer "If we restrict what credit cards can charge, then people won't be able to get credit." Are we the only one's who are insulted by the fact that the moderators on these shows seem to work for Citibank? One's financial well being as well as sanity is almost predicated upon not watching and reading the conventional media as it has a perverting effect both on one's knowledge level and values. If Business Week or Fortune Magazine ever had a thought opinion or glancing emotion that was not pro corporate and completely anti worker, environment and sustainability, we would like to know what it was. The financial media landscape is abysmal, but we have an antidote. Dollars and Sense (D&S) writes from the perspective of a heretical concept in our time; that the economy should actually benefit the people that work in it. D&S actually questions the official story and provides financial and economics reporting within a context of values. Not mindless repetition of catch phrases regarding "free markets," to paper over free rides for the ultra wealthy, but actual values. For most Americans, values are taught to be important, but only in certain settings. There are the values for "us," but then the values for GM, Monsanto and Goldman Sachs, and because they are businesses and must make a profit, they can do things no one would tolerate from us personally. How this double standard of values was developed is the topic of a different article, but Dollars and Sense does not accept the double standard. This is one reason why their coverage and writing is so clean. Read the rest of the post. Labels: Ben Bernanke, Counter Economics, Gerald Friedman Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Is This the End of US Capitalism? (Gerald Friedman)This is the response that Gerald Friedman, of the UMass-Amherst econ department and the Center for Popular Economics, gave to Al Jazeera English in response to the question, "Is This the End of US Capitalism?" They also asked Jamie Galbraith (UT-Austin), Mark Weisbrot (CEPR), John Berlau (Competitive Enterprise Institute), and James S. Henry (author of The Blood Bankers.The end of US capitalism? I really doubt it. This is a very serious financial crisis and if mishandled could become a serious recession even a depression, but it is unlikely to be as bad as the Great Depression of 1929-40 as the authorities have learned to co-operate in crises. More importantly, a capitalist system - or any social system - can only be brought down by an opposing system supported by a rising economic class. There is no such contender on the horizon right now to challenge capitalism. So, we'll continue to muddle along. Still, it will be bad all around unless we change direction. An effective anti-depression strategy would help those with bad mortgages so that they will be able to make payments on their mortgages and keep their houses; such a policy would help the banks by allowing for a "trickle-up" effect. Instead, the Federal Reserve is trying to hold back the tide of defaults and foreclosures by helping the top. At best, this will transfer the costs to average Americans, who lose their homes, watch their neighbours lose their homes, and will in many cases lose jobs when construction and other businesses fail. Foreigners will be hurt too because many banks and other financial institutions outside the US have invested heavily in US securities including mortgages and stocks and bonds in US investment banks. Helping the people We need a trickle-up strategy: Help the financial barons by helping the people. The US should provide major help to people holding mortgages to renegotiate these and to make some payments so that people can stay in their homes and banks will be able to continue to carry these mortgages on their books. There should also be a major increase in unemployment benefits so laid-off workers are protected and can continue to buy things and make payments on their debts. This, too, will help the banks. We should also have a major public works programme to employ laid-off construction workers in overdue infrastructure building and have strict new transparency requirements on banks and other financial institutions. The Fed, the Treasury, and foreign central banks (especially the European Central Bank and the Bank of Japan) should announce that they will stand behind every major bank and financial institution so that average investors will be absolutely protected. This will end panic selling and allow the markets to stabilise. At the same time, the Fed and others should take an equity stake in these institutions to to pry open the accounting records and to enforce new regulations that would clearly separate normal business operations from the speculative activities of the last decade. Read the whole article. Labels: Al Jazeera, bailout, financial crisis, Gerald Friedman Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
