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This is the archive for January 2009

Monday, January 26, 2009

Imported cars at the port of Newark, NJ
Massive number of unsold imported cars at the port of Newark, New Jersey
Photo essay on unsold cars around the world

Basic Marxism suggests that capitalism goes into crisis when workers cannot buy back all of the goods they produce. Huge lots filling up with hundreds of thousands of unsalable new vehicles illustrates this with a vengeance. The fruits of a few decades of restricting the ability of workers to realize the full wages for the products they produce now are coming home to roost.

The inability of the economy to move the goods it produces also suggests that the Republican "stimulus" approach of providing "as much as $3,200 per family each year by reducing the lowest income tax rates" is silly. Cutting taxes on income people do not have will not help them much. We need a truly massive employment program that creates living-wage positions for every able-bodied worker. That's the only way this crisis will abate.

Monday, January 19, 2009

There is pressure on Obama from deep in the financial sanctum immediately to send in more bales of public cash for use as toilet paper by those who desperately seek a taxpayer backstop for their schemes gone awry.

Enough is enough. What we were told last fall is it's not a bailout, but a "rescue." None of them seem to care about causing, eventually, the public to need a rescue. That is where this eventually will end up unless the bleeding can be stopped. And that won't be pretty.

Krugman is correct:
A better approach would be to do what the government did with zombie savings and loans at the end of the 1980s: it seized the defunct banks, cleaning out the shareholders. Then it transferred their bad assets to a special institution, the Resolution Trust Corporation; paid off enough of the banks? debts to make them solvent; and sold the fixed-up banks to new owners.
We must now insist that the greater public good is more important than keeping Big Bank shareholders whole.

Thursday, January 15, 2009

I thought this was apt from Atrios:
Bailouts might be justifiable if common stockholders were wiped out and the gov't had voting shares. Otherwise, just a big bonfire of cash!
I've been watching CNBC this morning and the financial mood has turned glum. This is the seventh straight losing day on Wall Street with shares in Citi and Bank of America leading the way down.

Citigroup, of course, as recently as December was injected with tens of billions of taxpayer dollars. Last year Bank of America rode in on a white horse for the belly-up Countrywide Financial, but now after receiving $25 billion in taxpayer TARP funds, it has "struggled to digest its January 1 buyout of former Wall Street brokerage giant Merrill Lynch & Co."

This will get worse before it gets better, if it ever gets better. Welcome to Washington, President Obama.

Thursday, January 08, 2009

Dramatic action by government required

Twenty-eight years ago, an incoming president said,
PRESIDENT RONALD W. REAGAN (1st Inaugural Address, January 20, 1981): The economic ills we suffer have come upon us over several decades. They will not go away in days, weeks, or months, but they will go away. They will go away because we as Americans have the capacity now, as we've had in the past, to do whatever needs to be done to preserve this last and greatest bastion of freedom.

In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price.
I would mark the turning point that began the current crisis to that moment, the day President Reagan took office. The Reagan years were marked by unbridled fraud and criminality. The realm of regulated capitalism within which the economy had operated for about five decades was whittled down under the Reagan "government is the problem" mantra. Within a couple of years Reagan would sign de-regulatory legislation that foreshadowed the mess we have today: