Full Employment: First Principle Of New Populism

Word is there’s an economic recovery going on. The New Populism ConferenceBut approximately 99 percent of us have no reason to believe that.

The public sees that the government bailed out the biggest banks and that the “recovery” is going really well for a very few people. But most Americans are actually falling behind, and know it. Wages are still stagnant at best and the minimum wage has fallen so far behind that people working full time remain in poverty. Unemployment is down largely because of people “leaving the workforce.” And all along government services are being cut and cut and cut.

People see the government working for a wealthy few at the top, and against the rest of us. People see the rigged game at work against them. This is not just an economic and human catastrophe. With an election coming, key Democratic constituencies have simply been left behind during the Obama administration. “Are you better off now than you were 4 or 8 years ago? HELL NO!”

So this could become a political catastrophe as well, potentially bringing the return of the very people and conditions that got the country into this mess.

An Ongoing Catastrophe For Regular People

What Washington has done since the “Reagan Revolution” and especially since the 2008 crash has benefited the few, usually at the expense of the general public. Washington rescued the big banks, and left homeowners and the rest of us to fend for ourselves.

Anti-inflation monetary policy has been a catastrophe for regular people. (Protecting Wall Street at the expense of Main Street? Really?)

Washington’s austerity, budget-cutting fixation has been a catastrophe for regular people. (Laying off hundreds of thousands of public employees, cutting public investment and cutting back on the safety net during an unemployment crisis? Really?)

Washington’s “free trade” policies have been great for giant, multinational corporations but have been a catastrophe for regular people, sending millions upon millions of jobs out of the country. (Not even confronting blatant currency manipulation that is costing 5.8 million jobs? Really?)

Washington’s corporate tax policies have been a catastrophe for regular people. (Giving companies huge tax breaks for moving jobs, factories and profit centers out of the country? Really?)

One catastrophe after another hitting regular people. And people see it coming from a system that is rigged against them, working just fine for a wealthy few.

We did get the “stimulus.” The stimulus reversed the terrible plunge in jobs and showed that our government could fix the jobs emergency.

But that was all it did, and that was it. It worked but it was just not enough to get things going again. And now it’s five years later. As most people can see, after the stimulus the Obama administration capitulated to Republican/Wall Street demands for austerity – and outright budget blackmail. The President even at times reinforced the right’s ideological position by boasting about government progress in balancing its books rather than emphasizing the human cost of not boosting government resources to drive job creation. Democrats even voted to cut food stamp spending and the president signed the bill! (Cutting Food Stamps in the middle of a national jobs and poverty emergency? Really?)

We Demand Full Employment

The New Populism Conference on Thursday will demand full employment as the first principle of the new populism.

We demand full employment! Full employment means there is a job for everyone who wants a job. There is simply no reason whatsoever that we can’t have full employment – except for policies that are intentionally keeping us from having full employment.

We demand full employment! Why isn’t our government stepping up and just hiring all of the people who need jobs? It’s not as if there are not enough things that need to be done. Our infrastructure is in serious need of repair. We need to retrofit millions of buildings and homes in the country to be energy efficient. We need to build a modern energy grid to bring energy from wind farms that we need to build in the plains states (where the wind is) to the cities and industrial centers (where the need is). We need to cut the number of children per classroom in half. We need to do … so many things. Why isn’t our government the employer of last resort, just hiring people to do those things we need done – in the middle of an employment emergency?

We demand full employment! Unemployment is a human and economic catastrophe. There are so many things our government could do besides direct hiring (which they should be doing). Our government could fix our job-sucking trade deals and balance the trade budget. Our government could demand that corporations return the trillions of dollars they are holding outside of the country to avoid paying the taxes due on that money. That’s a double whammy; take away the huge incentive to move jobs out of the country because of the tax break – and use the money they already owe to just hire millions of people!

The New Populism Conference

Two speakers at this week’s New Populism Conference, Rep. Keith Ellison (D-Minn.) and economist Jared Bernstein will talk about the importance of growth and jobs in order to bring about a rapid change in inequality.

Rep. Ellison will talk about the Progressive Caucus investment strategy for full employment. Bernstein will talk about full employment and his recent book, “Getting Back to Full Employment: A Better Bargain for Working People,” co-written with economist Dean Baker.


The New Populism Conference on May 22 in Washington (featuring Sen. Elizabeth Warren) will discuss ways to fight for an agenda for economic change that strong majorities of Americans already support. (See the Populist Majority website containing polling numbers showing that Americans support this New Populist agenda.) Click here to register or to watch the conference live online.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Compare Detroit And Wall Street

Compare the Detroit bankruptcy with the Wall Street bailout. The banks got trillions for bailouts. The bankers even got huge bonuse out of that bailout money

But in Detroit old people will lose pensions.

It’s about priorities.

Compare how the different situations were handled, who was helped, who paid. Detroit will have to “restructure” and sell off public property. Which banks were restructured, had to change the way they did business, give their property to the government, etc?

Will people in Detroit get bonuses like the bankers got?

“Spreadsheet Error” Economists Blame “The Left” Not “Science”

In an op-ed in the NY Times today the “spreadsheet error” economists tell us all we need to know about their research and their conclusions. In the op-ed, Reinhart and Rogoff: Responding to Our Critics, skip to the last paragraph:

“Now we are being attacked by the left — primarily by those who have a view that the risks of higher public debt should not be part of the policy conversation. “

“The left?”

I think these two words tell the whole story. All the economists and other scholars who are criticizing the errors and selective use of favorable data in work represent “the left.” Actual science that looks at the real world to see what actually happens is “the left.”

Downward Spiral

Here is the situation:

Continue reading

Jobs

Everyone knows that during the depression the government hired unemployed people to work on the infrastructure, parks, etc., and isn’t doing that this time.

Back then We the People were in charge, at least to more of an extent than today. So We the People did things to make our lives better. We the People doing things together to make our lives better is called democracy.

Now government just makes the lives of the wealthiest even better. This is plutocracy.

Cyprus Lesson: Watch Your Bank

There is a lesson from the Cyprus situation: If you are a large depositor you need to watch your back bank. You can’t just assume someone will bail out the banks — and you. The big banks have been able to keep governments from reigning them in, while getting governments to bail them out. That game is over.

From now on you have to take a look at the bank’s books and business practices and decide for yourself if your money is safe.

Right now it looks like large depositors in Cyprus’ banks are going to take a 30-40% “haircut” – meaning when the banks reopen 30-40% of their money will be gone. This is the “bailout” alternative to the banks failing and all of the money going away.

The Cyprus lesson is that deregulation and “keeping government from meddling with business” means it’s all on you now, on your own, by yourself, to watch out for your own interests. And that’s expensive. Really, really expensive.

It’s the libertarian dream, home to roost.

Not Greece

Cyprus is not like Greece. The government didn’t borrow a lot of money. What happened is that their banks failed. Cyprus’ banks seven-or-eight times the size of Cyprus’ economy when the EU average was three times, in-part because they offered tax-haven status to depositors around the world. In particular they attracted wealthy Russian and British tax-evaders. If the banks fail they will lose their money. And they were doing what big banks do with depositors’ funds — bad loan, speculation, investing in Greek bonds… It turned out that when something is unsustainable it can’t be sustained, and this time it wasn’t. The banks failed.

But it wasn’t just wealthy Russians and Brits on the line here … Cyprus’ businesses also have their money in Cyprus’ banks. So here’s the thing: If the banks just fail it would mean that every business in Cyprus would lose their money too, and be unable to make their payrolls, pay their creditors, even pay their rent.

When Banks Fail You Lose Your Money

Here is something that most people don’t understand: When banks fail every depositor loses their money. In the depression banks failed and depositors lost their money. Regular people around the country lost their savings. This is what causes bank runs – people trying to get their money out in time. The ones who don’t get there in time lose everything.

Since the depression American banks are insured up to a certain amount by the Federal Depository Insurance C-something (FDIC), and this has prevented these bank runs. When bank fails the FDIC steps in (usually on a Friday evening), closes the bank and arranges for another bank to take over the insured accounts (usually by Monday morning) and regular depositors hardly even notice the change.

European depositors with $100,000 Euros or less are also insured, so these Cypriot depositors will be repaid at some point. Amounts over that will have to wait for the banks to be liquidated, and might or might not get some pennies on the Euro.

On top of that, when banks fail you can’t get normal financing. It becomes difficult to borrow to meet the next payroll even though you have more than that due from receivables, or to get financing to upgrade your equipment even though your cash flow can handle the payments…

So governments have to step in when there is a systemic banking-system failure. If they don’t the entire economy in that country basically just shuts down.

The Cyprus Deal Means You Have To Watch Your Bank

So Cyprus needs to bail out its big banks or lose everything, and the government is making a deal with the International Monetary Fund and German and other banks for a loan to keep things going. It looks like the Cyprus bank bailout deal means depositors with amounts over the insured level are “taking a haircut” and losing 40% of their money.

Before this happened in Cyprus you usually large depositors could stick their money in a generic “bank” and if something happened a government would step in and get you most, if not all, of your money. Banks were generic banks, they held you money and when you needed it you could just get it.

But now there is a lesson: banks can fail and government might not step in and bail everyone out. You can lose your money.

You can lose your money.

This means you have to pay attention to which bank you are putting your money in. You need to look at the particular bank you are putting your money into and understand if they are playing games, speculating, hiding things from their books, making bets with a “London Whale,” using fantasy valuations or “repos” to make their books look better, laundering money for drug dealers or terrorists, etc.

It’s on you, because government’s aren’t doing it. Whether it is due to deregulation or “regulatory capture,” the banks are doing what they want, when they want and to whom they want. And no one is holding them accountable. You can lose your money.

Government is no longer functioning when it comes to big banks, so you have to do the work yourself. You can lose your money so you have to know if your bank is on the level. Good luck with that.

Anti-government types, you got what you wanted. Government is not “meddling” with businesses – at least not with the big banks. So sit back and enjoy the ride.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Today’s Housing Bubble Post

Yes, I am reviving the “Today’s Housing Bubble Post” that was so popular prior to the (last) crash.

In a local weekend paper today I saw a 3br, 2ba regular old house on a regular old street in a regular neighborhood in Cupertino, CA listed for $1.4 million.

Fed-driven low interest rates lead to asset bubbles. Tax cuts for the rich lead to massive wealth inequality and investors with too much money chasing fad-speculations like birds all flying off a wire at the same time.

We need a different approach. What we need for the economy is a massive infrastructure modernization effort. Since the Reagan tax cuts we have deferred maintaining our infrastructure (and cut education and everything else) and it has caught up with us.

The Congressional Progressive Caucus “Back To Work Budget” immediately hires 7 million people to fix our infrastructure and pays for it by bring tax rates on the wealthy back to Clinton levels, plus new brackets for millionaires and billionaires. And they tax capital gains at the same rate as regular income. But they don’t even bring it back to pre-Reagan levels!

m4s0n501

How To Understand The Greece Situation

Why are the Greek people forced to take big wage cuts, lose pensions, etc., as well as forced to privatize — sell off their public holdings into the hands of wealthy 1%ers who will then rent the services back to them for a profit?
They are forced to do this to bail out banks. These banks made loans and charged fees and high interest rates according to their own evaluations of the risk of making those loans. They understood when they made the loans that people in Greece had pensions, etc. But now that the banks crashed the economy of the world, it is the fault of the lazy people of Greece for having pensions and living high on the hog, and they have to suffer so that the banks can get all their money.
Once again, banks made loans based on valuations of risk and charged fees meant to cover losses of potential defaults. They made loans to lots of people, expecting a certain default rate, and charged money according to that risk. But now that the risk is realized, they are not happy just making what they charged (which as based on the risks they understood), and want the people of Greece to cut jobs, wages, pensions, to make sure the banks are paid.
Now, watch this carefully, especially starting at 3:50. This is about Ireland, but it may as well be Greece, or here. From What Wolf and You Can Learn from the Irish Press for the GOP Debate,

“Now, why are the Irish people required to pay billions to unguaranteed bondholders under threat to the ECB.” “You people are intervening in this society causing huge damage, by requiring us to make payments, not for the benefit of anybody in Ireland, but for the benefit of European financial institutions. Now could you explain why the Irish people are inflicted with this burden.”
No response.
Also – and this is very important, note the difference between this journalist, and what we have here in the US. This journalist is willing to press the real question and is not kowtowing to the big corporate 1%er spokesman. You won’t see that on the American corporate media, not ever, if the reporter wants to keep his or her job.

The Marlboro Man Can Grab a Smoke With Obama

Today begins the days of John Boehner, aka the Orange Man. Listen, you can hear his horse approaching. Oh my, it’s like a new Marlboro commercial. Guess he and Obama can grab a smoke together outside the Oval Office. Yikes! That’s a real Hallmark moment.
Early this morning, Progressive blogger, Dave Johnson extolled the virtues of the Progressive bloggers that “were right,” and he and they were correct. “It was about the jobs, jobs, and jobs.” But let’s be blunt — there are no jobs; there is no money being loaned; employment is rampant; the banks are paying a whopping 1% interest on savings; and now there is NO hope and the inmates have taken the keys!
Yeah, we know that a loss was anticipated in an incumbent year, but not one that lost hope. Sadly, the American people either stayed home, or voted for the lunatics that were responsible for the situation. Obama and all those Democratic spin masters blew it big time. They allowed the Tea Party — fueled by Frank Luntz’s rhetoric– to harness this rage and win the day. How the heck did that happen? Now, the every person in this country has just had a profound temper tantrum, and the collateral damage is huge.
Please note that a version of this article was published earlier today in the Huffington Post.