Now that the healthcare wars in DC are settling down, the pols and bankers have to find something else to make into a “crisis”. Of course, they could (theoretically) actually address the true, real crises we’re facing: unconscionably high unemployment, industries/markets that have become enormously uncompetitive and oligopolistic, and a banking sector that’s threatening to grow even larger and more reckless than 2 years ago. But those addressing those crises would help ordinary people. That’s not attractive to the Wall St-DC set.
So they look for a new monster to slay (that would also allow Wall St lots of profits). The new monster is called “DEFICIT” and “PUBLIC DEBT”. We’re all supposed to quake in our shoes at the mere mention. We’re supposed to be so afraid of these mythical beasts that we all line up to surrender our social security benefits and ask to be taxed even more. Never mind that Social Security is actually quite sound financially. Or that a sovereign nation with a floating fiat currency need never default unless it chooses to. Oh well.
The fix appears to be in. The President’s new “Debt Commission” is loaded with folks that have already made up their mind: you giving up your social security benefits is a sacrifice they’re willing to make. Looks like there will be lots to blog about SS this year as the topic heats up.
A decade of wars, tax cuts for the wealthy, and the fallout from Wall Street’s housing bubble have almost tripled U.S. public debt since 2001, from $5 trillion to $14 trillion. Big, scary numbers like this, along with carefully timed downgrade warnings from Wall Street’s obedient rating agencies and continuing worries about the financial collapse of Greece, Portugal and other nations have changed the political climate in Washington, breathing new life into decades-old schemes to slash Social Security and Medicare entitlements.
And defending Social Security does indeed sound like yesterday’s issue — a fight the people won when they defeated Bush’s attempt to privatize the system in 2005. Our Social Security program is currently solvent through 2037, while millions of Americans are unemployed, millions more are losing their homes, and still millions more are struggling to meet soaring health insurance costs after watching their retirement accounts dwindle in the financial collapse. Would the entitlement wolves — primarily Wall Street executives who stand to reap billions from Social Security privatization — really have the gall to go after Social Security now? In a word, yes.
Lots to catch up as taxes and grading have taken my time the last week or so.
The Philadelphia Fed Reserve Bank issues “Philly Fed Coincident Indicators”. This is an index, state-by-state, of various economic indicators. The index helps tell whether the local (state) economy is improving or not. As you can see from the map, Michigan is leading – the only state with a more than 1% improvement in the 3 -month index. Now granted, we’re improving from a very depressed, low level. But improvement is improvement and if Michigan is to return to “normal” conditions like most states, we have to improve more, faster. I like it. It’s confirmation of the same message we’re getting from the state-by-state unemployment data. See here
Click on map for larger image.
Here is a map of the three month change in the Philly Fed state coincident indicators. Twenty five states are showing declining three month activity. The index increased in 18 states, and was unchanged in 7
Here is the Philadelphia Fed state coincident index release for February.
In the past month, the indexes increased in 21 states, decreased in 22, and remained unchanged in seven for a one-month diffusion index of -2. Over the past three months, the indexes increased in 18 states, decreased in 25, and remained unchanged in seven for a three-month diffusion index of -14.
From a Republican Vice-Presidential candidate:
Too much cannot be said against the men of wealth who sacrifice everything to getting wealth. There is not in the world a more ignoble character than the mere money-getting American, insensible to every duty, regardless of every principle, bent only on amassing a fortune, and putting his fortune only to the basest uses —whether these uses be to speculate in stocks and wreck railroads himself, or to allow his son to lead a life of foolish and expensive idleness and gross debauchery, or to purchase some scoundrel of high social position, foreign or native, for his daughter. Such a man is only the more dangerous if he occasionally does some deed like founding a college or endowing a church, which makes those good people who are also foolish forget his real iniquity. These men are equally careless of the working men, whom they oppress, and of the State, whose existence they imperil. There are not very many of them, but there is a very great number of men who approach more or less closely to the type, and, just in so far as they do so approach, they are curses to the country.
The candidate, BTW, was Theodore Roosevelt, later President of the US. It seems that the “men of great wealth” often continue to behave as badly today as they did 115 years ago when Teddy wrote/spoke this. On the other hand, the party of Roosevelt has sure changed. TR would be cast-out of today’s Republican party as some sort of “socialist” that wants “class warfare”. Source here. (h/t Brad Delong)
Today Paul Krugman claimed:
From Ben Bernanke’s encomium to Milton Friedman:
It was in large part to improve the management of banking panics that the Federal Reserve was created in 1913. However, as Friedman and Schwartz discuss in some detail, in the early 1930s the Federal Reserve did not serve that function. The problem within the Fed was largely doctrinal: Fed officials appeared to subscribe to Treasury Secretary Andrew Mellon’s infamous ‘liquidationist’ thesis, that weeding out “weak” banks was a harsh but necessary prerequisite to the recovery of the banking system. Moreover, most of the failing banks were small banks (as opposed to what we would now call money-center banks) and not members of the Federal Reserve System. Thus the Fed saw no particular need to try to stem the panics.
The point is that breaking up the big players, then saying that it’s OK to let banks fail because no one player is crucial to the system is not a solution.
He knows better and I’m disappointed at his misleading rhetoric. What he wrote is highly deceptive. Nobody today is urging that banks be allowed to fail in the way they failed in 1930-32. Then there was no FDIC, no protection of depositors, and no real mechanism for an orderly dissolution of the existing management and transfer of what was valuable to a new, stronger bank.
What folks are asking for today is that the biggies (the TBTF) be broken up so that they can be, if necessary, handled the same way the rest of the banks are today. To imply that critics of TBTF’s are asking that banks be allowed to fail in the same way as 1930 is total nonsense.