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The framers respected majority rule … January 4, 2012

Posted by WillardWhyte in 2012 elections, Financial Reform, Obama, Politics.
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… and built a government around it, one that has served us extremely well over our 230-odd years. They were careful to not design their government with slavish adherence to this rule,  building in numerous checks and balances on power — among branches, within branches and with frequent elections to reflect changing public sentiments.

Over time,  both the Senate and House arrived at rules, procedures and courtesies that allowed the machinery of government to move, with a very healthy respect for minority opinion and stature. This all came together to form a government that moved slowly, with consideration and conservation — by design.

The filibuster for centuries was the Death Star — the ultimate weapon for a minority in Congress to employ to draw a very firm line in the sand on a matter not routine, a matter that went to the very core of principle.

Of late, that weapon has become a tool used by the minority in Congress to impose its will on the nation, on matters large and small, petty and of portent. It no longer relates to principle, except by extension from a minor matter down a very long tortuous logic chain to a “principal” such as a question of the relative strength of government overall, perhaps, or of methodology.

It has been used to usurp majority rule and, with intent, to bring the functioning of duly elected government to a halt.

Today the President said: “Enough.” He went ahead and used his recess appointment power to install Richard Cordray as head of the Consumer Financial Protection Bureau, a much-needed agency enacted into law in 2009.

Republicans who opposed the Dodd-Frank financial reform bill in 2009 lost that vote to a healthy majority after many compromises were incorporated into the bill to accommodate the minority’s views. What initially was proposed as a separate, standalone agency was moved within the Treasury Department — a concession to those who feared it could become a rogue operating on its own, with its own budget and no oversight by people with sufficient respect for the needs of lenders, be they banks, near-banks or the many non-bank actors making payday loans.

Some Republicans see no need at all for an agency acting to require fair, open and honest lending — and debt instruments a common person can understand. They have attempted for more than a year to overturn the majority verdict on this bureau with stalemate, backed by the threat of filibuster on any and all nominees to head this lawfully established agency. They lacked the votes to alter the enabling legislation, so they dug in their heels and refused to allow an up-or-down vote on the matter.

Now in nine months, the voters will listen to candidates for Congress, and all are welcome to discuss the merits of the law establishing this agency, any and all flaws in its establishment and propose any and all remedies. Perhaps their arguments will be telling and help win the election of a majority of like-thinkers to the House and the Senate — and perhaps even the White House.

At that point, they would be a majority backed by a clear vote and able to adopt a bill altering the current law. That’s how the Constitution set things up to work.

The minority view on a matter is not ignored or trampled. But the majority will holds sway until a new majority is elected and alters course.

A great many of the Republicans in Congress — and the voices over the air who urge them on — have worked now for more than a year to subvert the system that the Constitution established, many of them resorting to a suggestion that the vote of 2010 that granted the GOP a majority in the House came with a mantle anointing all of their views as blessed by a national majority.

Not so. Not so because the Founders were wise enough to not frame their government as a reflection of Parliament, to temper their democracy with systems that required the passage of considerable time to enable a majority voice to emerge fully formed, discussed and tempered.

The majority still rules in this nation and today the President spoke very forcefully in defense of that Constitutional concept — one the GOP with its long-running obstructionism has degraded to the detriment of the nation.

Voters who have watched this tyranny of a minority within a minority should mind the larger lesson: If this is how this party behaves with a share of power — with complete disrespect for majority rule — how do you think it would conduct business with majority power?

Clearly, the cadre sent to D.C. in 2010 have no respect whatever for any opinion other than their own, making them a danger to the nation and its people.

 

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Yes, let’s put Goldman back in charge December 4, 2010

Posted by WillardWhyte in Economy, Environment, Justice, Politics, U.S. Budget, Wall Street.
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I’ve been listening very very closely to all the reform talk down in the Swamp, emerging only with confusion.

One group – the bright Red one – rails against an end to what always was limited tax relief for the top 1 percent or 2 percent of earners, now casting any act to not extend this relief as a move that would sap the slow 3 percent recovery we are in the midst of. Can’t take that $80-$100 billion a year out of circulation in what they continue to say is a “recession,” even though the economy stopped receding and started proceeding four quarters ago.

They know that. But they lie because it’s convenient for the narrative.

This group, then, does a wonderful spin with full gainer, and demands an end to extended unemployment benefits and an immediate return to 2008 spending levels, reigning in such stimulus-intended measures as broadened Medicaid coverage, boosted university research grants, various individual tax credits designed to spur household spending on energy efficiency upgrades. This, if put into effect, would take at least $100 billion in spending by individuals out of the economy – spending on doctors, medicines, researcher salaries and equipment purchases and all those things all those people scraping by need to buy. You know, rent, milk, bread, gasoline, spaghetti sauce, mostly from small businesses, if that matters (actually, the Wal-Marts are counting on taking that “market share” pretty soon, so it doesn’t long term).

Somehow, the Red team doesn’t think this will in any way slow down the economic expansion, though study after study show without dispute that the poor and unemployed and even the middle class university research assistant have a much higher propensity to spend than does the individual or couple making $250,000 and up. So if you are going to pull $100 billion out of the economy – and either way you are doing that – and your true intention is to not hurt the recovery, you draw from the top, not the bottom, of the take-home ladder, because the subtraction of spending multiplied down the line is less.

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You can tax me now — or tax me later November 11, 2010

Posted by WillardWhyte in Economy, Politics.
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Twin stories from Bloomberg — here on Obama and there on Bernanke’s Bucks — have some unsettling news for the hundreds of millions out there waiting for an economic boost to follow the GOP ascent to House leadership, or from the Federal Reserve’s $600 billion buy of Treasuries.

Investors think they are going to get their cash reward with extended tax cuts, like the new climate for investments and see hope for a smaller U.S. budget deficit.

But the view is pessimistic when it comes to any GOP impact on the overall economy, job gains or credit.

And they think  — a whopping 76 percent of them — that Ben’s money move will have absolutely no effect on unemployment in the U.S. And by a 56-41 margin — with 3% too busy bidding up gold to answer — they said the Fed move would not bolster the U.S. economy in the coming year.

They know the purchasing power simply is not there — not across the board as it needs to be to sustain healthy production.

I say this and note this poll not to depress, but in the hope that it helps us all get to the place we need to be: One where we do not expect things to get radically better, radically soon — and govern our expectations well.

The devastation from the Crash of 2008 requires rebuilding the economy and we must demand from our elected officials plans for that — not snake oil promises or pledges or pablum suggesting they can do this overnight.

They can’t — we can’t. Anyone who says they have a magic elixir is lying, rendering them part of the problem.

Oh — I forgot to mention that those investors don’t like Obama.

Gold bars, future oil, cotton ain’t gonna hire Joe the Plumber November 8, 2010

Posted by WillardWhyte in Economy, Politics, Wall Street.
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I found this take on Ben’s money-move to be quite on target. This in particular from Richard Fisher, president of the Fed bank in Dallas:

I could envision such action would lead to a declining dollar, encouraging further speculation, provoking commodity hoarding, accelerate the transfer of wealth from the deliberate save and unfortunate, and possibly place at risk the stature and importance of the Fed.

But Ben knows this, just as he knows that the odds of monetary policy stimulating job growth and greater consumption in the U.S. are extremely long.  It’s his only play, knowing now the fiscal side is headed toward the austerity solution demanded by the voters, ostensibly. And that will take billions out of circulation in 6-8 months.

With no new wage growth on the horizon at anything but the top end, throwing accelerant on commodities and equities and potential bubbles abroad is intentioally destablizing, a sort of drop-the-gloves-and-hope-the-sparks-fly approach that depends on some of the embers landing in the deadwood and warming many.

But Ben undervalues the monkey still perched on the back of money markets —  the jonesing for fast money made with money, not output of goods and services in demand. The dice and spinning wheels and flashing lights still draw the biggest crowd, and garner the loudest roars from the onlookers.

It’s going to help some folks make a good chunk of change on the house, Ben. That’s about it, because a “real job” is still the chump play.

The folks sitting on the mounds of cash are not coming off until your cheap money is all gone and it becomes clear the only way to make money is the old-fashioned way.

Funny, didn’t hear about this on Monday November 4, 2010

Posted by WillardWhyte in Economy, Greed, Politics.
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The guy set to take over the House Financial Services Committee — which oversees agencies regulating banks — shows what’s tops on his agenda: Rolling back financial reforms to let the banks back into high-stake gambling with U.S. government insured deposits. That’s long for: Your money and mine, “insured” by your tax dollars and mine.

Reuters is here and Salon is here. Here’s a quote from Rep. Spencer Bachus’ letter to Treasury Secretary Timothy Geithner and other top regulators, who are writing rules they were ordered to write by the financial reform law passed last spring.

I strongly recommend that your study of the Volcker Rule take account of how trading activities fit into the core business plan of global banks, as well as the consequences for U.S. banks and the banks’ clients of prohibiting those activities in the U.S. while they continue to be permitted everywhere else in the world.

Funny — I’ve read that five times now and I must have missed the part about you and me and how the Volcker Rule would be bad for us and getting rid of it would create jobs.

Well Butch, we’ll get to all you cowpokes out there after we make things better for Wells Fargo.

Why don’t we ask them to think? September 25, 2010

Posted by WillardWhyte in Economy, Politics, Wall Street.
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In the blizzard of lies, slanders, pledges and pure manure that this year is standing in as political discourse, anyone left still searching for a baseline of hard, unadulterated data from which to form an opinion on critical economic decisions before us is in a tough spot.

The zealots have the field and from their extreme vantages on the Red or Blue fringe they hurl their slogans, their spin-studies and prove their ridiculous contentions with a shard of a subset of numbers yanked free of the critical context that allows them to give some insight into what all is going on out there in a very complex and fluid economy.

I think my favorite actor remains Rep. John Boehner, the House minority leader and Speaker-in-Waiting, who continues to whine about the great uncertainty in the business community that is playing a huge role in holding the economy back. Business leaders won’t commit to hiring, reinvestment or new product launches because they can’t see over the horizon – at least, they can’t build into profit-loss models hard numbers for things like personal income tax rates, capital gains rates, health insurance costs or outlays for such things as pollution control gear, new product labeling or safety testing. They can’t do anything to grow their businesses because – alas poor Yorick – of the policies of President Obama and the Democrats.

Which, of course, is sophistry.

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Maybe there’s a reason it’s called FOX News September 1, 2010

Posted by WillardWhyte in Economy, Greed, Justice, Politics.
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I see that former Wachovia Corp. Chief Executive Officer Robert Steel is telling the Financial Crisis Inquiry Commission today that he was told by FDIC Chairman Sheila Bair in late Setptember, 2008 to find a dance partner with something left in its pockets, because the mortgage crap it was holding threatened the U.S. banking system.

This Bloomberg News story tells the early tale. Make particular note of this:

Steel, the former U.S. Treasury Department and Goldman Sachs Group Inc. executive, was brought in to lead Charlotte, North Carolina-based Wachovia in 2008 as the lender struggled to recover from the aftermath of its $24 billion purchase of Golden West Financial Corp. The deal saddled Wachovia with about $120 billion of adjustable-rate mortgages that allowed borrowers to skip some interest payments and add them to the loan balance. The concept assumed home prices would go up. Instead, the idea backfired when prices fell, leaving borrowers with mortgages that exceeded the value of their homes and Wachovia with mounting losses.

That’s $120 billion in garbage interest-only and other high-risk mortgages created by the bankers in California to pump new money into the superheated real estate market driven by flippers and other speculators. BIG NOTE: This was not done by government; it was done by the private sector, at the end stage aided and abetted by Fannie Mae and Freddie Mac, also at the time privately held and run by financial industry veterans.

So please don’t swallow the myth being spun — and heavily marketed by Wall Street — that the bubble slime on all of US was OUR fault because of actions by OUR government. It’s just not true.

Sure, many of US were sucked into the interest-only crap, or steered into liar loans.  And many of US benefited from the housing boom, which put a lot of people to work for a very long time making houses, selling houses and producing all the materials that went into what was a major part of the U.S. economy for two decades.

That’s almost all gone now folks — and no amount of “tax cuts” and “getting government off our backs” is going to bring it back. Something else must be built to take its place, and that’s a whole lot harder and will take a long time. Everyone running for Congress needs to explain in detail how they plan to make that rebuilding happen.

We all should watch what is said before this commission and make sure this story is told fully, extensively — and accurately.

Because what all fell down in September 2008 — and the people who made that happen and reasons for it — is why we still are struggling today — and will for the next five years — to rebuild our economy.

And it wasn’t our fault;  it wasn’t our government’s fault. It was the fault of recklessness, greed and fraud by private industry leadership. And many of those foxes want to be put back in charge of the hen house.

An interesting set of rich-poor stats … July 28, 2010

Posted by WillardWhyte in Economy, Greed, Politics.
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from the folks at the Federal Reserve bank. So if the cashier asks you whether that’s credit or debit, you probably should say credit (assuming you pay it right down) so as you don’t indirectly tip some rich guy out in the Hamptons.

Maybe recent Financial Reform legislation will address “wealth transfer” with the clause that allows merchants to provide a discount for cash customers.

Dunno. Dunno if there’s anything that needs to be done about this down on the Potomac. Would seem like something that the market could correct on its own with a whole lot of consumer awareness and focused demand.

Getting close on reform June 9, 2010

Posted by WillardWhyte in Economy, Greed, Wall Street.
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After a very long  journey, congressional conference appears to be nearing some sort of consensus on financial reform, although the details seem to be dribbling out in a somewhat disappointing manner. Things are a lot less open than Rep. Barney Frank promised months ago, which can only result in mischief.

I highly recommend the summary view Politico posted up in the last day or so providing the views of  Joseph Stiglitz, a 2001  Nobel Prize winner in  economics and experienced in the ways of Washington from a stint as chairman of Bill Clinton’s Council of Economic Advisers.

I’d pay particularly close attention to his comments on derivatives and the various aspects of the two bills that take differing approaches to regulation in this area — and his advice to adopt the Volcker Rule as well as the tough elements in the Senate bill put forth by Sen. Blanche Lincoln. And to provide authority to undo deals that bypass clearinghouse and other rules.

I also think he is right on the money when he says Congress must make its intent clear in each and every instance, so that the inevitable legal engagements have something to reference aside from the Dancing of the Legal Stars.

The full piece is here.  The time is now — so anyone who values their money should weigh in.

We have Wall Street reform … May 20, 2010

Posted by WillardWhyte in Greed, Justice, Obama, Politics, Wall Street.
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… on a 59-39 vote a little while ago, with four Republicans on the Aye side and 2 Democrats on the Nay side. And the GOP is fully correct that the bill fails to tackle Fannie Mae and Freddie Mac and that remains a task for Congress to take on. But we have reform, imperfect as it surely will be out of the chute. Now we must keep it — and that will be a very tall task.

This creates a new set of rules of the road, and some may need adjustment as the inevitable unintended consequences reveal themselves and demand redress, or the intended consequences prove too harsh — or restrictive. And that will require vigilance we did not see in the cops on the beat, most of which we left  in place to do jobs expanded beyond their shape when things went off the rails without an alarm 18 months ago. Congress and the financial press cannot fail in their essential watchdog functions either.

And all must also keep a keen eye on the larger scene, for money will flow as it will, and greed will drive the Masters to the edge of these new rules also, peering over, around and under for and edge, a crack, a flaw. New threats will emerge to markets that simply must be fair and police to remain open and healthy.

But this is a huge step. I applaud those who refused to say it is too hard — all 98 for this debate was constructive, productive democracy as I prefer it.

Let us pray that in the end result there is wisdom.