Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Economic Positions of (almost) All the CandidatesCompare the records and policy proposals of not only John McCain and Barack Obama, but also Libertarian Party candidate Bob Barr, Green Party candidate Cynthia McKinney, and independent candidate Ralph Nader on a wide range of (mostly domestic) economic issues.Find a pdf of the candidate comparison here. Labels: Barack Obama, Bob Barr, Cynthia McKinney, john mccain, Ralph Nader Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Spread the WealthFrom Jake Trapper's blog at ABC News:Outside Toledo, Ohio, on Sunday, Sen. Barack Obama, D-Ill., was approached by plumber Joe Wurzelbacher, a big, bald man with a goatee who asked Obama if he believes in the American dream. "I'm getting ready to buy a company that makes 250 to 280 thousand dollars a year," Wurzelbacher said. "Your new tax plan is going to tax me more, isn't it?" Obama said, "First off, you would get a 50% tax credit so you'd get a tax cut for your healthcare costs... if your revenue is above 250—then from 250 down, your taxes are going to stay the same. It is true that from 250 up—from 250—300 or so, so for that additional amount, you'd go from 36 to 39%, which is what it was under Bill Clinton. And the reason why we're doing that is because 95% of small businesses make less than 250. So what I want to do is give them a tax cut. I want to give all these folks who are bus drivers, teachers, auto workers who make less, I want to give them a tax cut. And so what we're doing is, we are saying that folks who make more than 250 that that marginal amount above 250—they're gonna be taxed at a 39 instead of a 36% rate." Responded Wurzelbacher, "the reason I ask you about the American dream, I mean I've worked hard. I'm a plumber. I work 10-12 hours a day and I'm buying this company and I'm going to continue working that way. I'm getting taxed more and more while fulfilling the American dream." "Well," said Obama, "here's a way of thinking about it. How long have been a plumber?" Wurzelbacher said 15 years. Obama says, "Over the last 15 years, when you weren't making 250, you would have been given a tax cut from me, so you'd actually have more money, which means you would have saved more, which means you would have gotten to the point where you could build your small business quicker than under the current tax code. So there are two ways of looking at it—I mean one way of looking at it is, now that you've become more successful through hard work—you don't want to be taxed as much." "Exactly," Wurzelbacher said. Obama continued, "But another way of looking at it is 95% of folks who are making less than 250, they may be working hard too, but they're being taxed at a higher rate than they would be under mine. So what I'm doing is, put yourself back 10 years ago when you were only making whatever, 60 or 70. Under my tax plan you would be keeping more of your paycheck, you'd be paying lower taxes, which means you would have saved…Now look, nobody likes high taxes." "No," said Wurzelbacher. "Of course not," said Obama. "But what's happened is that we end up—we've cut taxes a lot for folks like me who make a lot more than 250. We haven't given a break to folks who make less, and as a consequence, the average wage and income for ordinary folks, the vast majority of Americans, has actually gone down over the last eight years. So all I want to do is—I've got a tax cut. The only thing that changes, is I'm gonna cut taxes a little bit more for the folks who are most in need and for the 5% of the folks who are doing very well - even though they've been working hard and I appreciate that—I just want to make sure they're paying a little bit more in order to pay for those other tax cuts. Now, I respect the disagreement. I just want you to be clear—it's not that I want to punish your success—I just want to make sure that everybody who is behind you—that they've got a chance at success too." Wurzelbacher said it seemed as though Obama might support a flat tax. Obama says, "you know, I would be open to it except here's the problem with a flat tax is that if you actually put a flat tax together, in order for it to work and replace all the revenue that we've got, you'd probably end up having to make it like about a 40% sales tax. I mean that's the value added, making it up. Now some people say 23 or 25, but in truth when you add up all the revenue that would need to be raised, you'd have to slap on a whole bunch of sales taxes on. And I do believe for folks like me who have worked hard, but frankly also been lucky, I don't mind paying just a little bit more than the waitress that I just met over there who's things are slow and she can barely make the rent." Obama said, "My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody. If you've got a plumbing business, you're gonna be better off if you're gonna be better off if you've got a whole bunch of customers who can afford to hire you, and right now everybody's so pinched that business is bad for everybody and I think when you spread the wealth around, it's good for everybody." That's the key moment McCain is jumping out..."when you spread the wealth around it's good for everybody." "But listen," Obama said, shaking Wurzelbacher's hand, "I respect what you do and I respect your question, and even if I don't get your vote, I'm still gonna be working hard on your behalf, because small businesses are what creates jobs in this country and I want to encourage it." "Guys I gotta get out of here and go prepare for the debate," Obama said, "but that was pretty good practice right there." Labels: Jake Trapper, Joe the Plumber, Joe Wurzelbacher, john mccain, Obama Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Central Bankers, et al: Supply and, uh, What?This posting is from D&S collective member and frequent blogger Larry Peterson. To see more of his posts, click here.Well, the verdict from the markets is in, and they rejected the new Treasury plan to recpitalize the banking system with almost as much enthusiasm as certain members of the House of Representatves rejected the first Treasury plan in late September. As befits a country with a disgraceful healthcare system, the soggy plaster hurriedly applied by the financial mandarins was washed away by a torrent of bloodletting on Wall Street today, with US indices giving up almost all the enormous gains they made after the unprecedented Central Bank interventions at the weekend. And this in spite of a halving of the cost of credit default insurance, and tentative signs of improvement in the all-important interbank and even commercial paper markets. The reason? A poor monthly retail sales report confirmed evidence from the just published Federal Reserve Beige Book on the health of the economy, and the indications are quite poor. As a consequence, non-financial stocks, which never really got going anyway after the announcement of the plan, fell sharply, particularly in cyclical industries and consumer goods. The (quite sensible) sentiment seems to be: all the corporate liquidity in the world (assuming it becomes truly and safely available) won't help sell to consumers who have nothing to pay for products and services anyway, as they are up to their necks in debt, and facing the prospect of swingeing job cuts, recession and--ahem--paying off the still incalculable debt of the banks anyway. And that goes for overseas consumers, too: the recent export boom, which accounted for a vast part of the otherwise inexplicable growth of the economy for the first half of the year, is bound to tail off, as trading partners find themselves, as the Europeans did, swiftly caught up in recession, or have to concentrate on shoring up domestic economies, as China and other countries still experiencing growth may have to do. Especially if the US dollar retains its position as every speculator's security blanket in time of turmoil. So bad times are on the way. What to do? Well, once Obama is elected (I have no doubt that he will humiliate the hapless McCain and his pathetic sidekick--and I wouldn't be surprised if Obama announces the outline of a semi-ambitious economic program during the presidential debate tonight, in order to consign the economically illiterate McCain to Dole-like irrelevance in the waning days of the election season), and even before, we must be on his case: we need to pressure him to focus oin the demand-side of the economy, replacing the rot of increasing consumer-indebtedness from the outsourcing of good jobs and speculative asset-bubbles that engender increasingly jobless recoveries with public works programs of huge proportions. We can't let him, as was the case with our current economic bureacrats, make the mistake that a crisis of this nature can be solved merely by adding to one side of the equation. And these public works programs must be focused on productive endevors, of which there is no shortage: a single-payer healtcare system, serious, even drastic, environmental reform, and the end to global military adventures: we can't squander the money on favoring the housing sector, or trying to subsidize heavy polluters. But it's not going to be easy. So get out there, or be prepared to feel some serious pain, sucker. It's that simple. Labels: financial crisis, john mccain, Larry Peterson, Obama, recession, stock market Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Monday's DevelopmentsThis posting is from D&S collective member and frequent blogger Larry Peterson. To see more of his posts, click here.Here's the skivvy on the government interventions that triggered huge stock rallies (as for US stocks, Dow up some 750 points, S&P nearly back at 1,000, with about 15 minutes left in the trading day) worldwide (with the notable exception of Japan), from Reuters. But notice especially the following: That had an instant impact on bank-to-bank lending rates, which eased, but there was still no clear evidence of funds cascading from banks to companies. Global bank rescue aims to halt crisis I'll close by citing two blog posts that pick some holes in the new arrangements. From Yves Smith's excellent Naked Capitalism: The reader/investor who sent the link to this Bloomberg story provided the comments below. No, he does not resort to capital letters casually: And this, from the fine Across the Curve: In the previous posting I noted that the German government rescue plan which includes guarantees and capital injections totalled 470 billion euros. Labels: Across the Curve, george bush, Gordon Brown, john mccain, Larry Peterson, Naked Capitalism, Paul Krugman, Yves Smith Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Bailout Negotiation BreakdownThis posting is from D&S collective member and frequent blogger Larry Peterson. To see more of his posts, click here.Beyond the Elite Reality Principle? The failure of Congress to pass the Treasury’s plan to bail out the shadow banking system may portend nothing less than a fundamental shift in the American—even global—economic development, akin to that which ushered in the deregulatory, neoliberal regime after the crisis of corporate profitability and labor/social unrest of the ‘seventies. Combined with apparently considerable opposition from constituents throughout the country, lawmakers’ resistance (even discounting both grandstanding, election year politicking, and the tendency, in times of crisis, to take refuge in wacky ideologies—like Republicans who complain about the United States becoming socialist, etc.) indicates that a central force that held both Democratic and Republican coalitions together for over a generation, namely, wildly pro-business, and especially financial sector, policies that massively enrich increasingly globalized elites, largely by setting constituencies of working people worldwide against each other, and arbitraging the difference, is no longer sustainable. That conservative lawmakers/politicians, even for purely political reasons (John McCain perhaps being the best case in point) have rejected this bill, which was seen as being almost certain to pass only yesterday afternoon, shows this clearly: and our foreign creditors will just have to get used to the fact that, at least temporarily, and surely intermittently in future, even if/when a new bill is passed, the old consensus is a thing of the past. Today should be quite a wild ride on the New York and Chicago markets (foreign markets fell on the news of the breakdown), and this morning’s revelation that Washington Mutual has finally gone down in the largest bank seizure in American history, will only increase the agony. And, lest we forget, a batch of negative economic indicators were released yesterday: the overhang of unsold houses back about its highest levels for the year, durable goods crashing after the export boom of the last few months, initial claims for unemployment rising. The fact that is, despite all this turmoil, and despite the understanding amongst those of elite opinion that this crisis demanded a drastic cure that would be “better than the alternative,” ordinary people—and their representatives, long infinitely more responsive to lobbyists, often from the financial industry, and all too often to foreign ones at that—than their constituents, are just not going to accept this “responsible” bill as it stands now. Even the extraordinary silly spectacle of Secretary Paulson kneeling in front of Speaker Pelosi, and all the shouting in the White House behind closed doors won’t change that. But there is a huge danger. The thing that has ultimately held the world financial order together through thick and thin for the last generation is the unrelenting willingness (some would call it stupidity) of the American taxpayer to fork out money. This has held despite the fact that ordinary workers have had to pay for more and more, despite stagnant incomes and falling (especially state-provided) benefits, as tax rates for the wealthy and corporations have both declined, and been diverted by hugely increasing incidences and opportunities for (not to mention highly profitable, for legal and financial “wealth managers”) dodges to tax shelters throughout the world. And it has held in spite of the fact that the money has been spent on phony wars, tax cuts for the already wealthy that do nothing to provide—and may even hinder—new jobs or rising incomes, as the latter’s ideologues claimed for so long, or was increasingly used for obviously politicized activities or dissipated in a kind of conspicuous corruption that would have engaged the great Veblen himself. Foreigners have come to see this as a kind of galvanic response on the part of Americans: perhaps until now. Are we ready to hold to our rejection of the elite reality principle, and attempt, under extraordinarily difficult conditions, to create, or at least articulate, a true alternative to the health-indicator-destroying, pollution-spewing, warmongering, mind-numbing regimen most of us seem to have finally acknowledged having serious reservations about now? I wonder; and that’s why I’m signing this post. Perhaps unlike some of my comrades at Dollars & Sense, I fear that the effects of turmoil in global markets will cause the majority of even those who stood up to the bailout package and forced legislators to bend to our will at last to falter; and that eventually, either lack of political will or desperation will allow for a temporary (and it’s not sustainable, but whether or not we can take advantage of the creation of the political void to insert something better I very much doubt) resuscitation of the elite consensus, and the passage of a new, perhaps even worse package. If so, it will be a huge irony: the quest for the unrealistic maintenance of a lifestyle characterized by our addiction to cheap imports, and fueled by the debt that was profitably foisted on us by the financial industry, will trump a political will for meaningful change (please don’t confuse this with Obama’s pitiful slogan) that hasn’t found similar expression, even, in my opinion, after September 11th, for over a generation. Looking at the faces of people around me, unconcerned and bored, worries me. But then again, the bailout package failed. Aux armes, comrades! —Larry Peterson Labels: bailout, Henry Paulson, john mccain, Larry Peterson, Treasury Department Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). McCain hasn't "had a chance" to read bailoutHat-tip to Doug Henwood of the Left Business Observer for this gem:SENATOR MCCAIN SAID TUESDAY THAT HE HADN'T READ THE BAILOUT PROPOSAL, according to Cleveland NBC station WKYC: 'In an exclusive interview he told Tom Beres, 'I have not had a chance to see it in writing. I have to examine it.' But note: The bailout proposal is only three pages long! Naomi Klein pointed out on Democracy Now! yesterday that the brevity of the bailout proposal might have been a blunder: NAOMI KLEIN: ... You know, and a lot of people have even described this Paulson plan as an economic PATRIOT Act. You know, one of the mistakes that I think they made, honestly, Amy, is how short it is. It’s just three pages, which means—you know, usually these pieces of legislation are much longer, so people don’t even bother reading them in that moment of extortion—you know, “Pass it now, or else…or else the sky falls in.” So, you know, in this case, I think they made a miscalculation. You know, there was an interesting article in Time that just came out, where they actually say that they have been working—you know, this is a quote—it says, “[Paulson] and his team [have] been working on [this] proposal for more than six months.” So, it’s quite surprising that it is as pared down as it is. It’s three pages. And the craziest thing has happened: people have read it. Regular people have read it. It doesn’t take that much time. And, you know, you read Section 8, which is just so stunning, just so bold in its demand for total and complete impunity. And that’s really what’s getting in their way, is people are reading this text, and they’re frankly shocked by it. Hear, or read the transcript of, the full interview. Labels: bailout, Democracy Now, Doug Henwood, john mccain, Naomi Klein 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!). McCain in Bed with Lobbyists; Taxpayers Get ScrewedToday's New York Times quotes D&S author Bill Black, in the article critical of Sen. John McCain that is raising such a ruckus among the political commentariat—especially among the right-wing types who had been so down on McCain until recently.Black was deputy director of the Federal Savings and Loan Insurance Corporation when McCain, along with the rest of the "Keating Five" (Sens. Alan Cranston, Dennis DeConcini, John Glenn, and Don Riegle) tried to influence regulators on behalf of Charles Keating, chairman of the then-failing Lincoln Savings & Loan. Black was one of the regulators the senators tried to influence; Edwin J. Gray, chairman of the Federal Home Loan Bank Board, was another. Keating had donated to all the senators' campaigns, and McCain's wife, Cindy, whom the Times describes as "the heiress to a beer fortune" in Arizona, had "joined Mr. Keating in investing in an Arizona shopping mall." The collapse of the Lincoln S&L cost taxpayers approximately $3.4 billion; the S&L crisis as a whole cost taxpayers more than $124 billion, according to the General Accounting Office. (Side note: the scandal did not end the careers of any of the Keating Five; Cranston, DeConcini, and Riegle all served out their terms; Glenn and McCain both stood for re-election and won. Perversely, after his senate term ended, DeConcini was appointed by President Clinton to the the Board of Directors of the Federal Home Loan Mortgage Corporation, aka "Freddie Mac".) The fuss about the Times article seems to be mostly about the somewhat weakly sourced suggestion that McCain had an affair with a lobbyist named Vicki Iseman. But to our way of thinking, McCain's participation in the Keating Five scandal and the S&L crisis is still the bigger story. Here is what Bill Black told the Times: Some people involved think Mr. McCain got off too lightly. William Black, one of the banking regulators the senator met with, argued that Mrs. McCain’s investment with Mr. Keating created an obvious conflict of interest for her husband. (Mr. McCain had said a prenuptial agreement divided the couple’s assets.) He should not be able to “put this behind him,” Mr. Black said. “It sullied his integrity.” Black presents a full history of the S&L crisis in his book The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry. That crisis—much like the current banking crisis—was the result of banking deregulation and the "control fraud" that inevitably follows it, as Black's recent D&S article shows. Labels: banking regulation, Bill Black, deregulation, john mccain, Keating Five, savings and loan crisis, William Black, William K. Black Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
