The Breadth and Depth of the US "Little Depression"

Luckily the current 3+ year recession isn't as bad as the Great Depression, but it is certainly far worse than any recession seen since WWII. This graphic from the Calculated Risk blog makes that very clear.



Click to Enlarge

You can't look at the above graph and not realize that America is in one big rut and Obama and all the politicians in Washington need to stop bickering and pass a really big stimulus bill to put many, many millions of people back to work.



I don't believe the Republicans have it in them to be honest and put the interest of the country before their cynical and petty political maneuvering. I really do believe they want to sabotage the US economy in the crazy belief that that will deliver them big electoral wins in 2012.

The Real Dick Cheney

Here is the start of a great article by Robert Scheer in The Nation:

Behold this unctuous knave, a disgrace to his nation as few before him, yet boasting unvarnished virtue. The deceit of Dick Cheney is indeed of Shakespearean proportions, as evidenced in his new memoir. For the former vice president, lying comes so easily that one must assume he takes the pursuit of truth to be nothing more than a reckless indulgence.



Here is a man who, more than anyone else in the Bush administration, trafficked in the campaign of deceit that caused tens of thousands to die, wasted trillions of dollars in resources and indelibly sullied the legacy of this nation through the practice of torture, which Cheney defends to this day. Still this villain claims that, despite the overwhelming evidence to the contrary, the horrid methods he endorsed were a necessary response to the threat of Osama bin Laden. How convenient to ignore that it was Barack Obama, a resolutely anti-torture president, who made good on the promise of Cheney and the previous administration to take down the Al Qaeda leader.



Not to mention that bin Laden was killed in his hiding place in Pakistan, a nation that the Bush administration had befriended after 9/11 by lifting the sanctions previously imposed in retaliation for Pakistan’s nuclear weapons program, a program connected with the proliferation of nuclear weapons know-how and the sale of nuclear material to North Korea, Libya and Iran.



Pakistan joined with only two other nations, Saudi Arabia and the United Arab Emirates, in granting diplomatic recognition to the Taliban government that provided a safe haven for Al Qaeda as bin Laden orchestrated the 9/11 attack. But instead of focusing on the source of the problem, Cheney led the effort to overthrow Saddam Hussein, who had ruthlessly hounded any Al Qaeda operatives who dared function in Iraq.



You don’t have to slog too deeply through Dick Cheney’s advertisement for himself to grasp not only the wicked cynicism of the man but also how shallow are his perceptions.

You really should read the whole article.



It was telling for me when in a recent interview Dick Cheney couldn't honestly answer the question: "if waterboarding is not torture, then you would not mind if a nation like Iran took an innocent American, claimed they were spying, and waterboarded them 'to get information' about the spying". Cheney never answered the question. Instead he wanted to draw invisible distinctions saying that waterboarding by Iran is torture, but waterboarding done by the US is not, it is only "enhanced interrogation".



Dick Cheney is the Adolf Eichmann of the Bush administration, i.e. a "bureaucrat" who blandly pursued evil and vicious policies while believing that he was serving "a higher purpose".

The US's Hidden Tax

Funny. Washington is paralyzed by a fight over deficits and the debt, over whether to raise taxes or cut taxes, over whether deregulation or a massive WPA will best create jobs. But these fights end up being over crumbs off the table.



Here is a bit from an article in Project Syndicate by Nassim Nicholas Taleb and Mark Spitznagel that point at a hidden $5 trillion tax on the American economy and the American people that Washington refuses to talk about or even acknowledge:

For the American economy – and for many other developed economies – the elephant in the room is the amount of money paid to bankers over the last five years. In the United States, the sum stands at an astounding $2.2 trillion for banks that have filings with the US Securities and Exchange Commission. Extrapolating over the coming decade, the numbers would approach $5 trillion, an amount vastly larger than what both President Barack Obama’s administration and his Republican opponents seem willing to cut from further government deficits.



That $5 trillion dollars is not money invested in building roads, schools, and other long-term projects, but is directly transferred from the American economy to the personal accounts of bank executives and employees. Such transfers represent as cunning a tax on everyone else as one can imagine. It feels quite iniquitous that bankers, having helped cause today’s financial and economic troubles, are the only class that is not suffering from them – and in many cases are actually benefiting.

Sadly, the authors of this article see no hope in relying on government regulators or the politicians to rein in the fraud and crime in the big banks. Instead, their lone hope is that investors will turn their backs on these companies and refuse to invest in them.

We don’t believe that regulation is a panacea for this state of affairs. The largest, most sophisticated banks have become expert at remaining one step ahead of regulators – constantly creating complex financial products and derivatives that skirt the letter of the rules. In these circumstances, more complicated regulations merely mean more billable hours for lawyers, more income for regulators switching sides, and more profits for derivatives traders.

That could work, but it requires a huge amount of self discipline and a deep belief in cooperative self-regulation by investors. Personally, I don't see it happening. I think the justice system and the political system have to come down hard on the banks. But Obama has refused to do it. So my hope is that somehow in 2012 American citizens will find a way to select representatives at all levels of government who pledge to hold the criminals of Wall Street and the big banks accountable for their acts. They need to unleash the police and they need to unleash a torrent of heavy-duty regulation on the banks. They need to come down hard on the exorbitant salaries of the financial industry to get people to abandon it and and stop the lure for young people to take up a life of crime as a "financial engineer".

Seeing Reality Through Ideology-tinted Glasses

Paul Krugman has a nice post on his NY Times blog giving David Brooks a tongue lashing for his cock-eyed unhistorical romanticizing of the past. Here`s a bit:

If you’re an intellectual of a certain age, you remember that in the 80s and maybe a bit of a way into the 90s it was common on the right to see American society as being in a process of catastrophic moral decline, descending into social anarchy. Crime would continue to rise, chaos would continue to spread, until and unless we returned to the Victorian virtues — and more specifically, to Dickensian social policies, in which only the deserving poor — as so designated by faith-based charities — received help. That, by the way, was the meaning of “compassionate conservatism”, which was about dismantling the welfare state in favor of private charity.



But then, in the 90s, a funny thing happened: in many ways, American society began healing. True, out-of-wedlock births continued to rise, although at a much slower pace. But crime plunged, and in general our society began to look a lot more functional. If you remember what New York was like in the Bonfire of the Vanities days, and you walk the city now, the transformation is awesome — and somehow that happened despite Social Security, Medicare, and Medicaid.



It’s also worth noticing that places like Germany and France, with their strong welfare states, somehow don’t seem to have descended into the social abyss. And if you look at a map of out-of-wedlock births, it’s not obvious, to say the least, that states with stronger safety nets do worse than hard-line low-service states.

It is astounding that the political right which claims to love the past so much -- they do claim to want to "conserve" it -- have such a foggy and unhistoric "memory" of it. I would have more regard for right wing ideologists if they actually had a memory of the real past, but to cling to a fiction? How can you take that sort of person seriously? We might as well want to go back to the days of gods & heroes. When somebody longs for the days when gods walked among us and builds a political program of going back to those "good old days", then I know they aren't worth listening to.

The New America Era of Political Paranoia

The McCarthy era was infamous for that drunken Senator's abuse of power, claiming to spot "commies" everywhere, in order to build up his political "prestige" at the expense of innocent lives destroyed. The HUAC committee ruined many lifes sending some to prison but also "tainting" many others. I had a college friend whose parents had signed a petition for the Rosenbergs and as a result for decades the FBI dutifully went to every employer telling them that their new employee was a "suspect" pinko and trying to get them to fire his parents. That was "the American way" of the McCarthy era.



I thought those days were long gone. But they aren't. With the start of this new millennium, the Republican party has taken an even more extreme turn to the right and since Obama's election real fanaticism has taken hold. You now get a representative shouting "liar!" at the President as he addresses a joint session, you have a Speaker of the House that refuses to give the President a date to address the joint session and instead dictating when he will "allow" the President to address the legislature. You get politicians unashamedly pandering lies about Obama being a "socialist" about his birth certificate being doctored and his loyalty. Outrageous, shameless accusations that the American people are allowing to be done to a sitting president. Incredible.



Here is a bit by Paul Krugman in a NY Times op-ed that talks about the poisonous tenor of US politics:

“Have you left no sense of decency?” That’s the question Joseph Welch famously asked Joseph McCarthy, as the red-baiting demagogue tried to ruin yet another innocent citizen. And these days, it’s the question I find myself wanting to ask Eric Cantor, the House majority leader, who has done more than anyone else to make policy blackmail — using innocent Americans as hostages — standard operating procedure for the G.O.P.



A few weeks ago, Mr. Cantor was the hard man in the confrontation over the debt ceiling; he was willing to endanger America’s financial credibility, putting our whole economy at risk, in order to extract budget concessions from President Obama. Now he’s doing it again, this time over disaster relief, making headlines by insisting that any federal aid to the victims of Hurricane Irene be offset by cuts in other spending. In effect, he is threatening to take Irene’s victims hostage.



Mr. Cantor’s critics have been quick to accuse him of hypocrisy, and with good reason. After all, he and his Republican colleagues showed no comparable interest in paying for the Bush administration’s huge unfunded initiatives. In particular, they did nothing to offset the cost of the Iraq war, which now stands at $800 billion and counting.



And it turns out that in 2004, when his home state of Virginia was struck by Tropical Storm Gaston, Mr. Cantor voted against a bill that would have required the same pay-as-you-go rule that he now advocates.



But, as I see it, hypocrisy is a secondary issue here. The primary issue should be the extraordinary nihilism now on display by Mr. Cantor and his colleagues — their willingness to flout all the usual conventions of fair play and, well, decency in order to get what they want.

Go read the whole article by Krugman.



Dark days are ahead for Americans because they have allowed a poisonous politics to arise. This is similar to the bitter partisanship and fanaticism that filled the air prior to the Civil War. During that time representatives showed the same disrespect, hurled curses and accusation, and on one occasion even had a Southern fanatical Congressman beat another. Those dark days are back.



From Wikipedia:

Two days later, on the afternoon of May 22, Brooks confronted Sumner as he sat writing at his desk in the almost empty Senate chamber: "Mr. Sumner, I have read your speech twice over carefully. It is a libel on South Carolina, and Mr. Butler, who is a relative of mine." As Sumner began to stand up, Brooks beat Sumner severely on the head before he could reach his feet, using a thick gutta-percha cane with a gold head. Sumner was knocked down and trapped under the heavy desk (which was bolted to the floor), but Brooks continued to strike Sumner until Sumner ripped the desk from the floor. By this time, Sumner was blinded by his own blood, and he staggered up the aisle and collapsed, lapsing into unconsciousness. Brooks continued to beat the motionless Sumner until his cane broke at which point he left the chamber. Several other Senators attempted to help Sumner, but were blocked by Keitt who brandished a pistol and shouted, "Let them be!" Keitt was censured for his actions.



Brooks was later fined $300 for his actions.

If that isn't graphic and murderous enough to make clear the growing doom of the US and the coming bloody, bloody Civil War, I don't know what else it would take. Today's battles aren't yet to that pitch, but they are fast getting there. That's why I foresee very dark days ahead for America. The fanatics -- racists, bigots, moral fools filled with their own righteous indignation -- are loose upon the land.

Criminality Still Rampant in US Banks

It is hard to believe, but US banks continue to create forged documents in order to foreclose on properties. This was exposed well over a year ago, and it is still going on. Worse, the Obama administration is presuring New York to join 49 other states in doing a deal to collect a few billion dollars as a "fine" and then declare that what was done was done and no criminal prosecutions will be launched. That is insane given the news that these crimes continue even as the negotiations with Obama's Justice Department and the Attorney Generals of all 50 states are in progress.



Here is a post by Barry Ritholtz in his The Big Picture blog:

As hard as it may seem to believe, the largest mortgage servicers are still fabricating documents for use in foreclosures.



That’s according to an article in American Banker, titled Robo-Signing Redux: Servicers Still Fabricating Foreclosure Documents.



Key points:



• The practice continues a year after the companies were caught in the robo-signing scandal, even as the industry has been negotiating a settlement with state attorneys general re: loan-servicing abuses.



• Several dozen documents reviewed by American Banker show that as recently as August some of the largest U.S. banks, including Bank of America Corp., Wells Fargo & Co., Ally Financial Inc., and OneWest Financial Inc., were essentially backdating paperwork necessary to support their right to foreclose.



• Some of documents reviewed by American Banker included signatures by current bank employees claiming to represent lenders that no longer exist.



• North Carolina consumer bankruptcy lawyer O. Max Gardner III says servicers and trustees often submit promissory notes in court without proper endorsements, which show the chain of title from one lender to another. Then, after the fact, there will be “a magically appearing note with a stamped endorsement,” Gardner said.



• When plaintiff’s lawyers then try to depose the person whose name is stamped on the endorsement, “we’re being told the person is no longer employed by the servicer or by the party for whom they signed,” Gardner says.



• Linda Tirelli, a New York bankruptcy lawyer, calls such mortgage documents “Ta-Da!” assignments because they seem to appear out of nowhere.



This is why a full investigation must be absolutely mandatory prior to any settlements with the lenders or servicers.

It is absolutely disgusting that Obama has refused to go after the banks that caused the $11 trillion collapse in the US economy. Not one single prosecution. And here, in the dust of the financial meltdown, the same banks are now out creating more crimes as they try to collect on mortgages for which they have lost the paperwork. They are simply creating forgeries to seize properties for which they do not have the proper legal paperwork. In polite society that is call "theft" and Obama is not only turning a blind eye, he is putting pressure on NY to going 49 other states to take a payoff to close the books on these crimes and let the banks off the hook. That would be bad enough by itself, but to put this pressure on the "close the books" while the banks continue to commit the same crimes again and again and again is simply unconscionable. I have lost all respect for Obama. He is pushing to hide crimes while the crimes continue!

Republican Mismanagement of the US Economy

What I find ludicrous is how the Republicans want to lecture the Democrats and Obama about "economics" and "budgets" and "deficits and debts".



Here is a bit from an article by Nobel prize-winning economist Joseph Stiglitz in Project Syndicate:

Even if Bush could be forgiven for taking America, and much of the rest of the world, to war on false pretenses, and for misrepresenting the cost of the venture, there is no excuse for how he chose to finance it. His was the first war in history paid for entirely on credit. As America went into battle, with deficits already soaring from his 2001 tax cut, Bush decided to plunge ahead with yet another round of tax “relief” for the wealthy.



Today, America is focused on unemployment and the deficit. Both threats to America’s future can, in no small measure, be traced to the wars in Afghanistan and Iraq. Increased defense spending, together with the Bush tax cuts, is a key reason why America went from a fiscal surplus of 2% of GDP when Bush was elected to its parlous deficit and debt position today. Direct government spending on those wars so far amounts to roughly $2 trillion – $17,000 for every US household – with bills yet to be received increasing this amount by more than 50%.

So how big is "the tab" that Bush and the Republicans have run up for their "war of choice"?

Indeed, when Linda Bilmes and I calculated America’s war costs three years ago, the conservative tally was $3-5 trillion. Since then, the costs have mounted further. With almost 50% of returning troops eligible to receive some level of disability payment, and more than 600,000 treated so far in veterans’ medical facilities, we now estimate that future disability payments and health-care costs will total $600-900 billion. But the social costs, reflected in veteran suicides (which have topped 18 per day in recent years) and family breakups, are incalculable.

Right now you've got the Republicans saying that won't add $1 billion to FEMA to help the latest victims of a natural disaster "because America is broke". Funny... nobody noticed this "broke" problem in 2001, 2002, 2003, 2004, 2005, 2006, 2007, or 2008 when Bush and the Republians were spending taxpayers money like a drunken sailor.



What I can't believe is that voters in the US continue to believe the incredible nonsense spewed by the Republicans, especially by their outrageous presidential "candidates" who show abysmal knowledge of economics, of foreign affairs, of the Constitution, of American history, of the legislative process, and the pain & hurt among the unemployed, foreclosed, the retired and soon-to-retire who have lost their life savings, and the young who face a job market that will be closed to them for a decade. These bozos claim they can "run" America. Yeah... just like Bush ran America... right into the ground.