Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

Thursday, August 1, 2013

President Obama in Chattanooga

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MY President came to MY hometown of Chattanooga! It was a great day with people lining Lee Highway and Bonny Oaks Drive with welcome signs hoping to catch a glimpse of the great man.

The Tea Party staged their own rally with "Impeach Obama" signs, but were restricted to the old Target Parking Lot for "security reasons" far away from Bonny Oaks and Amazon where the President made his speech. Ha - was it something they said, perhaps?

The Tennessee GOP made a silly video talking about how the President should "learn something" from the "Real Muricans" in our state - a state that gets plenty of government money, farm subsidies, etc. Luckily, Obama for America (OFA) had their own video welcoming video. The good definitely cancelled out the bad on this day.

































































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Chattanooga Mayor Andy Berke Describes Limo Ride with Obama
After being one of the first people to welcome President Barack Obama to Chattanooga, Mayor Andy Berke described his ride from the airport to the Amazon fulfillment center in the presidential limousine, known as "the beast."

"No big deal," Berke joked.
But although the ride may have been brief, Berke said the face time with the president was invaluable for the city. Berke said that during their transit from the Chattanooga Metropolitan Airport to Amazon, he shared stories of the city's success with Obama.

"The opportunity to spend a few minutes with the president of the United States comes only once in a lifetime," Berke said. "I certainly wanted to make sure that I portrayed Chattanooga in the best possible light because I think the president was genuinely curious about what we're doing here. It was a fantastic opportunity."

Berke said he and the president discussed items such as the city's record Internet speeds, efforts to reform education in the state and Chattanooga in general.

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Wednesday, March 20, 2013

Senator Warren: The Minimum Wage Should be $22/hour

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When I first started seeing this headline the other day, I thought whoa, that's not possible. Doesn't Elizabeth Warren know that many people work for 20 years and never make $22 per hour? There are people who have never made more than $10 per hour in their entire lives!

Yes - yes, she knows. And she is making the case that asking Congress to raise the minimum wage to $10 and hour is perfectly reasonable, given inflation and the fact that it should actually be double that much if we lived in a fair society.

Will it happen? Maybe or maybe not, but at least Warren is there raising the right questions and using the right data.

Huffington Post:
"If we started in 1960 and we said that as productivity goes up, that is as workers are producing more, then the minimum wage is going to go up the same. And if that were the case then the minimum wage today would be about $22 an hour," she said, speaking to Dr. Arindrajit Dube, a University of Massachusetts Amherst professor who has studied the economic impacts of minimum wage. "So my question is Mr. Dube, with a minimum wage of $7.25 an hour, what happened to the other $14.75? It sure didn't go to the worker."

And here she grills a restaurant owner who objects to any raise in the minimum wage, saying it would hurt sales. She points out that he would only have to raise prices on his menu 4-8 cents to make up the difference.



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Sunday, March 17, 2013

Senate Grills JP Morgan Bank

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The saga of the JP Morgan Bank "London Whale" disaster continued last week with the release of a major Senate report and public hearings on Capital Hill.

Previous Related Posts:
Economic News Round-Up ~ The London Whale
JP Morgan Fall-Out Continues
Dimon Cozies Up to Senate Banking Committee
Economic News Round-Up ~ London Whale Leaving JP Morgan

Cnn Money
During a press briefing Thursday, Levin said the investigation of 90,000 documents, and more than 200 phone conversation and instant messages, showed how the bank "ignored limits on risk taking, dodged oversight and misinformed the public."
But the report also criticized regulators at the Office of the Comptroller of the Currency for not following up on red flags.

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From AFP, via Google
Senator Carl Levin, at a hearing on JPMorgan's ill-fated "whale" trades, slammed the bank's trading operation that lost $6.2 billion over just a few months in 2012 as a "runaway train barreling through every risk limit."

"Derivative values that can't be trusted are a serious risk to our financial system," said Levin, the chairman of the Senate subcommittee on investigations.

The incident is a "reminder you just can't rely on a major bank... without a strong regulator looking over," Levin added.

A 300-page report by the subcommittee said that JPMorgan kept adding risky bets on top of earlier ones, hid losses, disregarded its own rules for risk limits, avoided oversight by its regulator and "misinformed" investors, regulators and the public.

Former and current JPMorgan executives testifying at the Senate hearing painted a picture of confusion and disbelief over the scale of the losses, which blindsided the Wall Street powerhouse in the first quarter of last year.

Ina Drew, JPMorgan's chief investment officer at the time with responsibility for the London trading operation which racked up the losses, admitted errors even as she pointed the finger at others.

"I was, and I remain, deeply disappointed and saddened that such significant losses occurred in the business unit I oversaw," said Drew, who resigned last year to take responsibility for the debacle, according to her prepared testimony.

But Drew also pointed a finger at London employees that she said misled her on the scale of the problem and "let me, and the company, down."






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Tuesday, January 15, 2013

Obama Presser on Debt Ceiling: "Not a Deadbeat Nation"

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So I want to be clear about this: The debt ceiling is not a question of authorizing more spending. Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to.

These are bills that have already been racked up, and we need to pay them. So, while I'm willing to compromise and find common ground over how to reduce our deficits, America cannot afford another debate with this Congress about whether or not they should pay the bills they've already racked up. If congressional Republicans refuse to pay America's bills on time, Social Security checks, and veterans benefits will be delayed.

We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialist who track down loose nuclear materials wouldn't get their paychecks. Investors around the world will ask if the United States of America is in fact a safe bet. Markets could go haywire, interest rates would spike for anybody who borrows money. Every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire.

It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession. And ironically it would probably increase our deficit. So to even entertain the idea of this happening, of the United States of America not paying its bills, is irresponsible. It's absurd. As the speaker said two years ago, it would be, and I'm quoting Speaker Boehner now, "a financial disaster, not only for us, but for the worldwide economy."

So we've got to pay our bills. And Republicans in Congress have two choices here. They can act responsibly, and pay America's bills, or they can act irresponsibly and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy. The financial wellbeing of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip. And they better choose quickly, because time is running short.

The last time republicans in Congress even flirted with this idea, our AAA credit rating was downgraded for the first time in our history. Our businesses created the fewest jobs of any month in nearly the past three years, and ironically, the whole fiasco actually added to the deficit.

So it shouldn't be surprising, given all this talk, that the American people think that Washington is hurting rather than helping the country at the moment. They see their representatives consumed with partisan brinkmanship over paying our bills while they overwhelmingly want us to focus on growing the economy and creating more jobs.

So let's finish this debate. Let's give our businesses and the world the certainty that our economy and our reputation are still second to none. We pay our bills, we handle our business, and then we can move on because America has a lot to do.

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Chuck Todd, NBC: Thank you, sir. As you know, Senate Democrats -- Harry Reid sent you a letter begging you, essentially, to take -- consider some sort of executive action on this debt ceiling issue. I know you've said you're not negotiating on it. Your administration has ruled out the various ideas that have been out there, the 14th Amendment, but just this morning, House -- one of the House Democratic leaders, Jim Clyburn, asked you to use the 14th Amendment and even said sometimes that's what it takes. He brought up the Emancipation Proclamation as saying they took executive action when Congress wouldn't act, and he compared the debt ceiling to that. So are you considering a Plan B? And if not, why not?

OBAMA: Well, Chuck, the issue here is whether or not America pays its bills. We are not a deadbeat nation. And so there's a very simple solution to this: Congress authorizes us to pay our bills. Now, if the House and the Senate want to give me the authority so that they don't have to take these tough votes, if they want to put the responsibility on me to raise the debt ceiling, I'm happy to take it. Mitch McConnell, the Republican leader in the Senate, had a proposal like that last year. And I'm happy to accept it.

But if they want to keep this responsibility, then they need to go ahead and get it done. And, you know, there are no magic tricks here. There are no loopholes. There are no, you know, easy outs. This is a matter of Congress authorizes spending. They order me to spend. They tell me, you need to fund our Defense Department at such-and-such a level, you need to send out Social Security checks, you need to make sure that you are paying to care for our veterans. They lay all this out for me, and -- because they have the spending power.

And so I am required by law to go ahead and pay these bills.

Separately, they also have to authorize a raising of the debt ceiling in order to make sure that those bills are paid. And so what Congress can't do is tell me to spend X and then say, "But we're not going to give you the authority to go ahead and pay the bills."

And I just want to repeat, because I think sometimes the American people understandably aren't following all -- all the debates here in Washington. Raising the debt ceiling does not authorize us to spend more. All it does is say, that America will pay its bills. And we are not a deadbeat nation.

And the consequences of us not paying our bills, as I outlined in my opening statement, would be disastrous. So, I understand the impulse to try to get around this in a simple way. But there's one way to get around this. There's one way to deal with it, and that is for Congress to authorize me to pay for those items of spending that they have already authorized. And the -- you know the -- the notion that Republicans in -- in the House, or maybe some Republicans in the Senate would suggest that in order for us to get our way on our spending priorities, that we would risk the full faith and credit of the United States, that I think is not what the founders intended.

That's now how I think most Americans think our democracy should work. You know they've got a point of view. Democrats in Congress have a point of view. They need to sit down, and -- and work out a compromise.

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Major Garrett: Thank you, Mr. President. As you well know, sir, finding votes for the debt ceiling can sometimes be complicated. You yourselves as a member of the Senate voted against a debt ceiling increase. And in previous aspects of American history, President Reagan in 1985, President George Herbert Walker Bush in 1990, President Clinton in 1997 all signed deficit reduction deals that were contingent upon or in the context of raising the debt ceiling. You yourself four times have done that; three times those were related to deficit reduction or budget maneuvers.

What Chuck and I and I think many people are curious about is this new adamant desire on your part not to negotiate when that seems to conflict with the entire history in the modern era of American presidents in the debt ceiling and your own history on the debt ceiling. And doesn't that suggest that we are going to go into a default situation, because no one is talking to each other about how to resolve this?

OBAMA: Well, no, Major. I think if you look at the history, getting votes for the debt ceiling is always difficult and budgets in this town are always difficult. I went through this just last year. But what's different is we never saw a situation as we saw last year in which certain groups in Congress took such an absolutist position that we came within a few days of defaulting.

And, you know, the fact of the matter is, is that we have never seen the debt ceiling used in this fashion, where the notion was, you know what, we might default unless we get 100 percent of what we want. That hasn't happened.

Now, as I indicated before, I'm happy to have a conversation about how we reduce our deficits further in a sensible way, although one thing I want to point out is that the American people are also concerned about how we grow our economy, how we put people back to work, how we make sure that we finance our workers getting properly trained and our schools are giving our kids the education we deserve. There's a whole growth agenda which will reduce our deficits that's important, as well.

But what you've never seen is the notion that has been presented so far at least by the Republicans that deficit reduction will only count spending cuts, that we will raise the deficit - or the debt ceiling dollar for dollar on spending cuts. There are a whole set of rules that have been established that are impossible to meet without doing severe damage to the economy. And so what we're not going to do is put ourselves in a position where in order to pay for spending that we've already incurred, that our two options are; we're either going to profoundly hurt the economy, and hurt middle- class families, and hurt seniors, and hurt kids who are trying to go to college, or alternatively we're going to blow up the economy. We're not going to do that.

(OFF-MIKE)

REPORTER: (INAUDIBLE) three-month extension for this? What ever Congress sends you, you're OK with?

OBAMA: No, not whatever Congress sends me. They're going to have to send me something that's sensible. And we shouldn't be doing this...

(CROSSTALK)

OBAMA: ...then we should -- and we shouldn't be doing this on a one to three month time frame. Why would we do that? This is the United States of America, Major. Why -- what -- we can't manage our affairs in such a way that we pay our bills? And we provide some certainty in terms of how we pay our bills? Look I -- I don't - I don't think anybody would consider my position unreasonable here. The -- I have...

(CROSSTALK)

(OFF-MIKE) REPORTER: (INAUDIBLE) talk about this on a daily basis (INAUDIBLE.)

OBAMA: Major, the -- I am happy to have a conversation about how we reduce our deficits. I am not going to have a monthly, or every three months conversation about whether or not we pay our bills. Because that, in and of itself does severe damage. Even the threat of default hurts our economy. It's hurting our economy as we speak. We shouldn't be having that debate.

If we want to have a conversation about how to reduce our deficit, let's have that. We've been having that for the last two years. We just had an entire campaign about it. And by the way, the American people agreed with me, that we should reduce our deficits in a balanced way, that also takes into account the need for us to grow this economy, and put people back to work.

And despite that conversation, and despite the election results, the position that's been taken, on the part of some House Republicans, is that, "Nope, we gotta do it our way. And if we don't, we simply won't pay America's bills."

Well, you know, that -- that can't be -- that can't be a position that is sustainable over time. It's not one that's good for the economy now. It's certainly not going to be the kind of precedent that I want to establish, not just for my presidency, but for future presidents. Even if it was on the other side.

Democrats don't like voting for the debt ceiling when a Republican's president. And yet, you -- you -- but you never saw a situation in which Democrats suggested somehow that we would go ahead and default if we didn't get 100 percent of our way. That's just not how it's supposed to work.
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Monday, January 7, 2013

Paul Krugman for Secretary of the Treasury?

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I'm a fan of Nobel-Prize winning economist and NYT writer Paul Krugman. He is also author of great books like The Conscience of a Liberal, The Price of Inequality: How Today's Divided Society Endangers Our Future, and End This Depression Now!. He's a force to be reckoned with in the world of economics - few can match his breadth of knowledge, or his willingness to be outspoken. Did I mention he is anti-austerity? Yeah, that's good, too.

Now there's a petition started by actor Danny Glover asking President Obama to seriously consider him for Secretary of Treasury to replace out-going Wall Street guy, Tim Geithner, who is like the anti-Krugman.

As of right now the petition has 208,755 signatures out of the 225,000 that was the original goal. That's huge! And yes, I signed it, too, because I want to join others in sending a message to President Obama that picking another Wall Street insider might not be the most creative idea in the world, or the best thing for our country.

Petition at Sign-On.Org
We urge you to nominate Paul Krugman for Treasury Secretary. Krugman will protect Social Security and Medicare from benefit cuts, promote policies to create jobs, and help defeat the austerity dogma in Washington and around the world.
Petition Background
Press reports say President Obama will soon nominate a new Treasury Secretary . Press speculation has centered on candidates likely to support the Wall Street agenda of cuts to Social Security and Medicare benefits and other domestic spending rather than government policies to create jobs. We want President Obama to nominate Nobel prize-winning economist Paul Krugman, who opposes austerity and wants the government to focus on creating jobs.

Mark Weisbrot, Co-Director of the Center for Economic and Policy Research in Washington, D.C., on why this is a good idea:
Krugman has been right about the major problems facing our economy, where many other economists and much of the business press have been wrong. A few examples: he wrote about the housing bubble before it collapsed and caused the Great Recession; he has forecast and explained that large budget deficits and trillions of dollars of "quantitative easing" (money creation) would not cause inflation or long-term interest rates to rise; and that the "confidence fairies" would not reward governments that pursued austerity in the face of recession.
Most importantly, Krugman is on the side of the majority of Americans. He has written extensively in favor of policies that favor job creation, explained the folly of budget cutting in the face of a weak economy, and opposes cuts to social security and Medicare benefits.
. . . since most of Wall Street's money went to Republican nominee Mitt Romney in the run-up to the November election, Obama doesn't owe anything to the people who crashed our economy and are now fighting to make senior citizens, working and poor people reduce their living standards.

Krugman has responded that maybe he does more for the country playing devil's advocate as the "Outside Man" on the New York Times:
Part of the reason is that I am indeed the World’s Worst Administrator — and that does matter. Someone else can do the paperwork — but an administrative job requires making hiring and firing decisions, it means keeping track of many things, and that, to say the least, is not my forte.
Oh, and there’s not a chance that I would be confirmed.
But the main point, as I see it, is that it would mean taking me out of a quasi-official job that I believe I’m good at and putting me into one I’d be bad at.
So first of all, let’s talk frankly about the job I have. The New York Times isn’t just some newspaper somewhere, it’s the nation’s paper of record. As a result, being an op-ed columnist at the Times is a pretty big deal — one I’m immensely grateful to have been granted — and those who hold the position, if they know how to use it effectively, have a lot more influence on national debate than, say, most senators. Does anyone doubt that the White House pays attention to what I write?

He's got a point about the confirmation, but then again, Obama can get things through Congress that few Presidents can. And the GOP might rather have someone who is a true liberal, someone they can bash daily, unlike Geithner who was a more low-profile Wall Street insider and therefore respected by the GOP as pro-business. Hey - that's another good reason to choose Krugman!

I think it's time to give Krugman a shot to actually work in the Administration instead of being their most vocal economic critic. I signed the petition because I think Krugman is right up there with Elizabeth Warren in his understanding of real Americans, and he cares more about the social safety net than Wall Street.

I am curious how Obama will respond to this. If he thinks Krugman isn't right for Treasury, then heck - make up a new post for him where he can help people! Put him in, Coach!


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Sunday, December 30, 2012

President Obama: Don't Blame "Both Sides" for Fiscal Cliff

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source: RawStory

Here's the President on Meet the Press today schooling David Gregory on why the press needs to give up the false equivalency meme. And I really loved that Obama used the phrase "country first" to describe his plans, since that was the McCain/Palin slogan in 2008. Ha.

The only thing I would caution against, David, is I think this notion of, "Well, both sides are just kind of unwilling to cooperate." And that's just not true. I mean if you look at the facts, what you have is a situation here where the Democratic Party, warts and all, and certainly me, warts and all, have consistently done our best to try to put country first.

And to try to work with everybody involved to make sure that we've got an economy [that] grows. Make sure that it works for everybody. Make sure that we're keeping the country safe. And does the Democratic Party still have some knee-jerk ideological positions and are there some folks in the Democratic Party who sometimes aren't reasonable? Of course. That's true of every political party.

But generally if you look at how I've tried to govern over the last four years and how I'll continue to try to govern, I'm not driven by some ideological agenda. I am a pretty practical guy. And I just want to make sure that things work. And one of the nice things about never having another election again, I will never campaign again, is I think you can rest assured that all I care about is making sure that I leave behind an America that is stronger, more prosperous, more stable, more secure than it was when I came into office.

More of the Transcript Here on PolicyMic

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Friday, December 21, 2012

The House that Boehner Built


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"You Built That"

We woke up today to the realization that while the world may have been spared an Apocalypse, Speaker of the House John Boehner actually didn't. In fact, karma went full-Mayan on him last night as the fickle finger of fate socked it to him in the form of his own GOP House members. You can't make this stuff up.

Last night John Boehner took his "Plan B" non-compromise with President Obama to the floor of the House. Rachel Maddow called it a "Republican Wish List." Everyone knew it wouldn't make any difference, since the Senate would never agree to it, and Obama wouldn't sign it because it has nothing to do with the negotiations on the Fiscal Cliff. But hey, it was something, right? It was all in the spirit of NOT going over the Fiscal Cliff on January 1st, which will raise taxes on everyone, including the poorest. So at least they were appearing to work overtime to fix things for the American people, even if misguided and unworkable with the Democrats. They would take a Friday night "purist" vote among Republicans who had signed on earlier in the day, no biggie french fry.

Except that it was. Because at some point, Boehner realized the Tea Party members wouldn't back Plan B after all, and they were pulling the rug out from under him. He was not in control of his people, and after weeks of talks with Obama, and hours of whipping his representatives in the house, the Speaker just didn't have the votes, and he gave up. He just announced he was giving up, and everyone could go home for Christmas, with no way to solve the Fiscal Cliff.

Twitter went nuts, of course, and Democrats and Republicans alike rushed to shame Boehner and House members:
Snark Amendment: Boehner Shambles as Plan B Fails
Snark Amendment: Boehner's Epic Fail in the House

Stunning. Rachel Maddow compared it to the curtain being pulled back on the Great and Powerful Oz, saying the Conservative Movement is "a complete mess." You could also say the Emperor has no Clothes, if Boehner ever did. But then he's dealing with a Tea Party that is run by a group of Mad Hatters.

Now the ball has been tossed back to Obama and Harry Reid in the Senate, and the Republicans have imploded and beclowned themselves again. The problem is, the rest of the country deserves better than the bewildering display last night in the House. They need Republicans to accept the results of the November election and learn to compromise with the sitting President. Once again we are left dangling while the Tea Party takes care of millionaires at the expense of everyone else, including their own constituents. What can stop the madness?

Rumor is the disgraced GOP will return to the House next week after Christmas to try once again to solve this AGAIN before Jan. 1, but don't hold your breath. Happy New Year!

Robert Costa on National Review
Inside the Meltdown
At a quarter to 8 p.m. on Thursday night, House Republicans gathered in the Capitol basement for an urgent, closed-door conference meeting. The scene was hushed and confused. Instead of huddling in a windowless room, members thought they’d spend the evening on the House floor, voting on “Plan B,” Speaker John Boehner’s fiscal-cliff proposal. But as they took their seats and looked at Boehner’s face, the reason for the gathering became clear: The speaker didn’t have the votes. The whipping was over. “Plan B” was dead.
. . . It was Boehner’s tone and body language that caught most Republicans off guard. The speaker looked defeated, unhappy, and exhausted after hours of wrangling. He didn’t want to fight. There was no name-calling. As a devout Roman Catholic, Boehner wanted to pray. “God grant me the serenity to accept the things I cannot change,” he told the crowd, according to attendees.
. . . Boehner had spent weeks negotiating with his members and the president. But in this final hour, when he needed Republicans most, he had only a prayer.

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Wednesday, December 5, 2012

Elizabeth Warren Will Serve on Banking Committee

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Sources told Huffington Post today that Senator Elizabeth Warren, D-MA, has been tapped to serve on the Banking Committee. This is happy news and a coup for Democrats since Warren, a consumer advocate and economics expert, was blocked by Republicans from serving as head of Consumer Financial Protection Bureau during Obama's first term.

From Wall Street Journal
Ms. Warren, who beat Republican Sen. Scott Brown for the Senate seat in November, emerged as a high-profile Wall Street critic after the financial crisis and hit on many of the same populist themes during her campaign. "Wall Street CEOs, the same ones who wrecked our economy...still strut around Congress...demanding favors," she said in her speech at the Democratic National Convention in September.

She embraced several policy positions that bankers dislike, including calling for a return to Glass-Steagall, the Depression-era law that separated commercial and investment banks.

. . . Several financial industry officials admit they're concerned about Ms. Warren being on the panel, given her policy positions and industry criticisms, but they said they don't know of any banks or lobbyists working against her selection.

With Ms. Warren on the banking panel, it may be harder for Republican critics of that agency and the banking industry to win any changes, such as replacing its director with a bipartisan commission structure.
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Monday, December 3, 2012

White House Rejects Boehner's Lame Offer

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House Speaker John Boehner sent President Obama a Counter-Offer for keeping the nation from going over the Fiscal Cliff - Slope - Curb - whatever. Needless to say it was lame and reminiscent of Romney's vague budget in which he wouldn't explain which tax deductions he would cut to balance the budget.

Therefore, Boehner's plan was a big fat zero, and the White House immediately rejected it with almost a yawn - nothing to see here.

PDF: Boehner and GOP Counter-Offer on Fiscal Cliff

Talking Points Memo: White House Rejection Letter
“The Republican letter released today does not meet the test of balance. In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill. Their plan includes nothing new and provides no details on which deductions they would eliminate, which loopholes they will close or which Medicare savings they would achieve.

Independent analysts who have looked at plans like this one have concluded that middle class taxes will have to go up to pay for lower rates for millionaires and billionaires.

While the President is willing to compromise to get a significant, balanced deal and believes that compromise is readily available to Congress, he is not willing to compromise on the principles of fairness and balance that include asking the wealthiest to pay higher rates. President Obama believes – and the American people agree – that the economy works best when it is grown from the middle out, not from the top down. Until the Republicans in Congress are willing to get serious about asking the wealthiest to pay slightly higher tax rates, we won’t be able to achieve a significant, balanced approach to reduce our deficit our nation needs.”

To that, Boehner Then Replied, also via TPM:
“Republicans have once again offered a responsible, balanced plan to avoid the fiscal cliff, and the White House has once again demonstrated how unreasonable it has become," Boehner's spokesman Brendan Buck said in a statement emailed to TPM. "If the President is rejecting this middle ground offer, it is now his obligation to present a plan that can pass both chambers of Congress."

So the drama will continue . . .

LA Times Story
Rejecting President Obama’s call to raise tax rates for the wealthy, House Republicans unveiled a counteroffer that would cut Medicare, Medicaid, Social Security and other federal programs while raising new revenue by overhauling the tax code.

House Speaker John A. Boehner (R-Ohio) and his GOP leadership team sent the White House the three-page offer Monday afternoon as the administration turned up the volume on their complaints that Republicans have been unwilling to put a serious proposal on the table.

. . . Obama has been fighting to preserve the lower tax rates for all but the wealthiest households, those earning more than $250,000 for couples and $200,000 for singles. The president has said the nation can no longer afford tax breaks for the wealthy that would cost about $900 billion over the decade. But Republicans are fighting to keep the tax breaks for all.

Monday, Republicans proposed capturing nearly the same amount of revenue by closing loopholes and limiting itemized deductions on the wealthiest households, while also launching a broader tax-reform process that would lower all tax rates.

Boehner and his team also proposed $1.4 trillion in savings from spending cuts — including healthcare reforms that could include raising the Medicare retirement age and asking wealthier seniors to pay higher Medicare premiums. They also proposed limiting the cost-of-living adjustments for Social Security recipients and others.

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Friday, November 30, 2012

Going Down the "Fiscal Slope" in January

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What is the Fiscal Cliff?  Or is it more of a Gentle Slope?

Source: San Francisco Chronicle
The term refers to the tax cuts that would expire and the automatic spending cuts that would take effect if Congress fails to act by year's end.

Why the deadline? Congress created it to compel action if a so-called supercommittee failed to find common ground on deficit reduction. It failed.

Tax increases: Expiration of the Bush-era tax cuts, along with a scheduled increase in the payroll tax, would raise taxes on all Americans by several percentage points.

Spending cuts: Federal spending would be trimmed by $1.5 trillion over the next decade. The few exempted areas include Social Security, Medicaid, military pay and veterans benefits.

Unemployment: About 2 million Americans will lose jobless benefits if the extended safety net program expires on Dec. 29.

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Source: The Economist


What has Obama offered the Republicans so far? 
He sent Tim Geitner to Capitol Hill with this plan:

From Huff Post
Geithner's offer would delay the sequester -- automatic spending cuts to the Pentagon and social programs -- for a year, and effectively eliminates the congressional requirement to lift the debt ceiling in perpetuity. The offer included an extension of unemployment insurance, the payroll tax and even money to help homeowners modify mortgages and invest in infrastructure. "I think there was a leprechaun in there somewhere, too," quipped one GOP aide.
The proposal is based on a two-step plan that would decouple the high-end tax and capital gains rates from the middle-class rates, extending only those for the middle class. It would revert estate taxes to their higher 2009 level, and raise an additional $600 billion in taxes elsewhere, according to the GOP summary. It then proposes tax reform required to raise at least as much as the tax hikes, and entitlement reform that would trim $400 billion from the programs.

Are Republicans really going to reject all offers to deal with Obama?
Will they remain loyal to the Tea Party and Grover Norquist?
Most sources behind the scenes say the smart people among them know taxes have to go up and they have to deal. Speaker Boehner seems to be holding to the Tea Party talking points, but interestingly his back-up team are getting the word out, so we can assume he is probably posturing for the camera.

Oklahoma Senator Tom Cole on NPR's All Things Considered:
SIEGEL: . . . a surprise from one of the top Republicans in the House. He broke ranks with his GOP colleagues. While they are holding out for an extension of all Bush-era tax cuts, Oklahoma Republican Tom Cole told members of the leadership team yesterday that they should hurry up and extend tax cuts for the bottom 98 percent of taxpayers.

BLOCK: As for the top 2 percent, Cole argues, Congress can worry about them later. NPR's David Welna caught up with Cole today and has this report.

DAVID WELNA, BYLINE: Oklahoma Republican Tom Cole just got re-elected to a sixth term in the House. He serves there as the GOP majority's deputy whip, and he's a close friend of Speaker John Boehner, which is why a lot of his colleagues were surprised when Politico first reported that Cole urged his colleagues in a closed-door meeting to approve an extension this year of all the expiring tax cuts except those that affect only the top 2 percent.

REPRESENTATIVE THOMAS JEFFERY COLE: We have an opportunity to make sure that the tax rates for 98 percent of the American people don't go up. I think we should do that sooner rather than later.

WELNA: That's Cole this afternoon.

COLE: I'm not trying to persuade anybody. I was asked: In my opinion, what's the best position for us to take? You know, what's in the best interest of the American people? What's in the best interest politically? I think that position that I outlined - that is, making sure that 98 percent of the American people have tax security, so to speak, and then continuing to fight on the other issues, and it doesn't mean giving in to rate increases. I don't believe in that. That's the right thing to do.

Senator John Thune (R-SD) on Fox News via ThinkProgress
MARTHA MAcCALLUM (HOST): What I’m asking you is are Republicans willing to hold the line, to say to the President, I am sorry, we will never agree to a deal that involves an increase in taxes? Are they?

THUNE: I think any deal that passes up here that raises taxes and raises taxes as I mentioned earlier on small businesses, Martha, is not going to enjoy Republican support. Now, there may be enough Republicans who would vote for something like that to pass it in the House of Representatives, they need to get to 218 votes.

MAcCALLUM: Then it would be done, right?

THUNE: We’ll see about that. We don’t know what that. We don’t know what the contours of a final deal might look at this point. Everybody right now is sort of in their corners and doing the posturing.

What happens if Congress does nothing? 
This article has a good explanation of what would probably happen:

Guardian UK
. . . all this discussion about a fiscal cliff is a bit of a misnomer – a cliff suggests a precipitous fall to a likely demise. But in reality, this cliff is more of a slope, or a slow but steady decline, down the road of fiscal austerity. Yes, tax and spending policies will shift after 1 January: taxes will go up and spending cuts mandated by law will begin to go in effect. But these are changes that will unfold over many months, and even years. Indeed, the immediate impact of the "fiscal cliff" will be relatively minor. As the Center for Budget and Policy Priorities noted recently:

"A relatively brief implementation of the tax and spending changes required by current law should cause little short-term damage to the economy as a whole."

This isn't to say that markets won't have a collective freakout or that confidence in Congress to actually do its job will decline further, but those are manageable issues, particularly because, once Washington goes over the cliff, it becomes much easier to quickly reach a deal between Republicans and Democrats.

. . . Let the tax cuts expire on 1 January, with taxes going up on every American. Then, Congress can quickly pass a massive tax cut for those making less than $250,000, retroactive to 1 January. Neither side will want to wait long and force Americans to pay higher taxes, but especially Republicans won't – as they will likely be blamed if no deal is swiftly reached. To do so would mean that all sides are politically satisfied: President Obama can say he stuck to his word about raising taxes on rich Americans, and taxes will have gone up without Republicans having to cast a vote; and both parties can reap the political benefit and claim credit for having cut taxes for the middle class.
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Thursday, October 18, 2012

Google Has a Terrible Horrible No-Good Very Bad Day

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Today Google "accidentally" released some type of earnings report that wasn't even edited, and the market responded in a such a bad way that Google trading was halted for at while, plus it pulled the total tech stock market into the dumps. What is going on here? 

From Bloomberg
Trading in Google’s stock was halted at about 12:50 p.m. New York time, and resumed at 3:20 p.m. after the company released a finalized version of its earnings document. The company said R.R. Donnelley (RRD) & Sons Co. released a draft of the quarterly results without permission. Google tumbled 8.1 percent to $694.01.

The company’s profit and sales missed analysts’ estimates, a sign that Google’s tools are becoming less valuable to advertisers while costs associated with expansion into new businesses are chipping away at profitability. The average amount advertisers paid each time a user clicks on a promotion declined about 15 percent from a year earlier, and was 3 percent less than the prior period.


From BuzFeed
Google makes virtually all of its money from contextual advertising in its own products, such as search and Gmail, and through partners that use its ad product, AdWords. That entire business model is based on the value of user clicks. (I click an ad in Gmail, Google gets a penny. I click on ad on a website that uses Adwords, the site owner and Google each get a half a penny. Repeat billions of times.)

The value of those clicks is going down, and there's no reason to believe it will go back up: this type of unintelligently targeted advertising is not popular on social networks, which are luring away advertisers, and AdWords specifically has no place on social networks that Google doesn't own.

This is a startling reminder that no tech company's position, no matter how towering, is permanent. And a clear illustration of why Google has been so, so insistent on making Google+ work, even to the detriment of its current, non-social users.

CNBC Story: Google Earnings, Revenue Miss Wall Street Forecasts
Following the earnings release surprise, the company issued a statement blaming its financial printer for the early release.

"Earlier this morning RR Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorization. We have ceased trading on NASDAQ while we work to finalize the document. Once it's finalized we will release our earnings, resume trading on NASDAQ and hold our earnings call as normal at 1:30 PM PT," the company said.

A spokesman for RR Donnelley said: "We are fully engaged in an investigation to determine how this event took place and are pursuing our first obligation – which is to serve our valued customer."

Google posted third-quarter earnings excluding items of $9.03 per share, down from $9.72 a share in the year-earlier period.

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Friday, September 14, 2012

Romney Gets Middle Class Income Wrong

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Oh, Mitt Romney ~ how ignorant you are! And you certainly aren't trying to get educated about the Middle Class. That's too bad because you are clearly out of touch with most Americans.

ABC News Complete Transcript: George Stephanopoulos Interviews Romney

MITT ROMNEY: Well, I said that there are five different studies that point out that we can get to a balanced budget without raising taxes on middle income people. Let me tell you, George, the fundamentals of my tax policy are these. Number one, reduce tax burdens on middle-income people. So no one can say my plan is going to raise taxes on middle-income people, because principle number one is keep the burden down on middle-income taxpayers.

GEORGE STEPHANOPOULOS: Is $100,000 middle income?

MITT ROMNEY: No, middle income is $200,000 to $250,000 and less. So number one, don’t reduce– or excuse me, don’t raise taxes on middle-income people, lower them. Number two, don’t reduce the share of taxes paid by the wealthiest. The top 5% will still pay the same share of taxes they pay today. That’s principle one, principle two. Principle three is create incentives for growth, make it easier for businesses to start and to add jobs. And finally, simplify the code, make it easier for people to pay their taxes than the way they have to now.


But Romney's figures are skewed towards the high side of income for the vast majority of Americans, as Jillian Rayfield points out on Salon::
Obama has said in the past that he’ll cut taxes for middle-class families making $250,000 and less per year, but the way Romney put it certainly doesn’t help the narrative that he’s out of touch with the middle class.
According to the Census Bureau, the current median household income in the U.S. is slightly over $50,000.
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Thursday, September 6, 2012

Elizabeth Warren For the Middle Class

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via facebook (share)

Elizabeth Warren is a Harvard Law Professor who is running for U.S. Senate in Massachusetts. She was especially uplifting to the Occupy Wall Street Movement last year, giving an inspirational speech that inspired millions. She was on track to be Head of Consumer Protection for the Obama Administration, but the Republicans blocked her confirmation so long that President Obama had to choose someone else.

But Warren rose again as a strong Senate candidate in Massachusetts, and just this week the Progressive Change Campaign Committee raised a million dollars for her campaign.


Complete Transcript of Elizabeth Warren's Speech Here

I grew up in an America that invested in its kids and built a strong middle class; that allowed millions of children to rise from poverty and establish secure lives. An America that created Social Security and Medicare so that seniors could live with dignity; an America in which each generation built something solid so that the next generation could build something better.

But for many years now, our middle class has been chipped, squeezed, and hammered. Talk to the construction worker I met from Malden, Massachusetts, who went nine months without finding work. Talk to the head of a manufacturing company in Franklin trying to protect jobs but worried about rising costs. Talk to the student in Worcester who worked hard to finish his college degree, and now he's drowning in debt. Their fight is my fight, and it's Barack Obama's fight too.

~~~~~~~

These folks don't resent that someone else makes more money. We're Americans. We celebrate success. We just don't want the game to be rigged. We've fought to level the playing field before. About a century ago, when corrosive greed threatened our economy and our way of life, the American people came together under the leadership of Teddy Roosevelt and other progressives, to bring our nation back from the brink.

~~~~~~~

Americans are fighters. We are tough, resourceful and creative. If we have the chance to fight on a level playing field—where everyone pays a fair share and everyone has a real shot—then no one can stop us. President Obama gets it because he's spent his life fighting for the middle class. And now he's fighting to level that playing field—because we know that the economy doesn't grow from the top down, but from the middle class out and the bottom up. That's how we create jobs and reduce the debt.

~~~~~~~

The Republican vision is clear: "I've got mine, the rest of you are on your own."

Republicans say they don't believe in government. Sure they do. They believe in government to help themselves and their powerful friends. After all, Mitt Romney's the guy who said corporations are people.

No, Governor Romney, corporations are not people. People have hearts, they have kids, they get jobs, they get sick, they cry, they dance. They live, they love, and they die. And that matters. That matters because we don't run this country for corporations, we run it for people. And that's why we need Barack Obama.

~~~~~~~

He believes in a country where everyone is held accountable. Where no one can steal your purse on Main Street or your pension on Wall Street. President Obama believes in a country where we invest in education, in roads and bridges, in science, and in the future, so we can create new opportunities, so the next kid can make it big, and the kid after that, and the kid after that. That's what president Obama believes.

~~~~~~~

I grew up in the Methodist Church and taught Sunday school. One of my favorite passages of scripture is: "Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me." Matthew 25:40. The passage teaches about God in each of us, that we are bound to each other and called to act. Not to sit, not to wait, but to act—all of us together.


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Tuesday, August 21, 2012

Bye-Bye to Best Buy?

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The Best Buy company is in big financial trouble these days. I can't really remember the last time I shopped there - it's been years. I never enjoyed the feeling of being in a big warehouse with loud music blaring. I'd rather be able to think straight while making purchases . . . but that's just me.

My kids were the ones who usually begged to go there to look at the latest video games, and we would indulge them. The problem is, we could get the same game for half the price at Target, and even less on Amazon. I figured out quickly that Best Buy "sales" weren't really sales.

Their dvds and cds are always overpriced and not stocked well, and when we had to buy a refrigerator we chose the local neighborhood appliance store where we could get a better deal, a good warranty, and same day delivery. Also, while I know they have great sales around Thanksgiving, I hate to get in line at 4 a.m. and fight with other shoppers, so I just stay home and get the exact same half-price deal on Amazon with free Super Saver shipping. And no loud music - just Christmas Carols.

To me this is a problem very much like Netflix causing Blockbuster to lose business. Convenience matters, and service matters. And greed is not that good if your sales are making customers walk out the door without buying anything. I can't tell you how many times we used to go to our local Blockbuster with money in our pockets around Christmas, but nothing was discounted except used movies, and those don't make great presents. I wasn't even surprised when our BB closed down - corporate jerks.

This is more bad news for cities across the country. Each Best Buy store provides lots of local jobs, and they are talking about closing down 50 locations (see story below). That's a shame. I'm sure the corporate overlords are preparing their golden umbrellas, while the kids that work at Best Buy have to go work at fast food restaurants or Home Depot. And the adult employees with families face an uncertain Christmas season with only unemployment pay. Sad.

From Wall Street Journal
Best Buy Co....may be running out of time to turn around its troubled electronics business after posting a 91% plunge in quarterly profit Tuesday and suspending its annual earnings forecast heading into the holiday shopping season.

The world's largest electronics chain reported second quarter earnings fell to $12 million from $128 million a year earlier. Its business eroded by almost every measure, from revenue to gross profit margins to same-store sales, as gains in smartphones and tablets failed to make up for computer and television declines.

Story from CNBC
Best Buy's problems have been compounded by "dinosaur (store) formats that we just don't need any longer," Widlitz said.

Critics have complained that Best Buy has become a showroom for Amazon.com Inc and other online retailers as shoppers go to its stores to check out electronics like high-definition televisions, then buy them elsewhere for less.

Ending the practice of showrooming is a top priority, Best Buy said in June.

The company has also said it is working to improve its online business and wants to reduce retail square footage further than a March plan to close 50 of its 1,100 large U.S. stores. Many investors were looking for deeper cuts to turn around the chain.
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Thursday, August 16, 2012

Facebook Still Falling on Wall Street

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I'm interested in economics mainly from a pschological or historical point of view, and I admit am not an investor of any kind, so from that perspective, it makes me a little proud of the prediction I made back in May when the Facebook IPO was about to be offered to the public:
In my opinion, and I'm not an economist but just an observer of human nature, this IPO may be happening just a little too late. Yes, there will be billionaires who build fortunes by selling out quickly, but some people - probably the small investors again, *sigh* - are going to lose a mint.

All my Posts about the Facebook IPO Here

What I discovered as the Facebook story unfolded was that the offering price of $38 was set way too high to begin with, and there was buyer's remorse right away due to problems with the Nasdaq (see Wall Street Journal video below). So there was a very small window of happiness with the stock which was mostly due to pre-IPO hype. Some buyers wanted to sell but were prohibited for 3 months. That period ended today and what happened ~ they sold off big time, so that Facebook's value fell to a new low.

From Reuters:
More than 270 million shares owned by early investors became available for trade on Thursday after a 3-month curb on sales ended. That's more than half the 421 million shares sold in its initial public offering on May 18.
. . . Analysts say Thursday's frenetic trading offers a taste of what may transpire in November, when many of the social network's employees get to cash in stock awards for the first time.
"An incredible amount, all the shares coming," said Steve Birenberg, president of Northlake Capital Management and portfolio manager for Entermedia Growth Partners, a hedge fund.
. . . The stock, which debuted at $38, fell as much as 7.1 percent to a all-time low of $19.69 before ending the day at $19.87.

Will employees really display a lack of brand loyalty and flood the market with shares in November? I think they probably will. None of it has played out in the market as promised, and the chance for making a killing is gone now. Most predictions for the economy are negative going into next year, so why hold a risky stock? It does worry me that it might happen close to the presidential election but that's unavoidable.

Facebook is still around and millions of people use it every day, but I still believe that it peaked a long time ago and isn't really the gold standard of social media anymore. I'll make another prediction just from my gut - Facebook will drift along sideways for the next couple of years, but probably won't rise above $25 a share again. If I'm wrong - if Facebook revamps with some fabulous new technology and becomes relevant again - I will be the first to admit that I was wrong. But I don't think I'm wrong. It might even fall lower or disappear entirely, but I won't go that far.

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