Archive for October, 2010
Tags: banks, capitalism, crisis, foreclosures, subprime mortgages
The current foreclosure mess has nothing to do with deadbeat borrowers. It’s all about the banks trying to clean up the mess they themselves made as quickly and cheaply as possible. And damn the consequences for homeowners and the rest of society.
Andrew Leonard challenges the hollow, self-serving pontifications of conservative politicians, Wall Street Journal pundits, and bank executives concerning the current mortgage morass. While many (perhaps even most) of the current foreclosures may not be in error, that doesn’t absolve the banks from pursuing their own profit-making agendas—in initially extending the loans, in getting the U.S. government to bail them out when the loans went south, and now in quickly foreclosing on those mortgages to improve their balance sheets.
The only puzzle that remains is why the Obama administration hasn’t capitalized on the mess created by the banks, to make the case for a different economic agenda.
The widespread use of robo-signers, the epidemic of lost paperwork, the proliferation of lawsuits, the potential invalidation of mortgage-backed securities — everything points to a systemic problem. The only real question is how big the mess will get. The White House should be far more out in front. Right before an election, the administration couldn’t have asked for a development that better illustrates the necessity for tight government supervision of the financial sector and industrial-strength consumer protection.But maybe Obama’s just afraid of being called “anti-business” again.
Or Obama and his economic advisers have, once again, made the choice about which side they’re on.
Tags: coal, mining, mountaintop removal, music
Lee Ballinger describes the “war going on for the soul of Appalachia, a war over coal and music.”
Other musical contributions include Kathy Mattea’s “Coal Tattoo” (and here’s Mattea on mountaintop removal), Dierk Bentley’s “Down in the Mine,” and Emmylou Harris, Alison Kraus, Patti Loveless, and Kathy Mattea singing John Prine’s “Paradise” (from the Music Saves Mountains concert).
When I was a child my family would travel
Down to Western Kentucky where my parents were born
And there’s a backwards old town that’s often remembered
So many times that my memories are worn.
And daddy won’t you take me back to Muhlenberg County
Down by the Green River where Paradise lay
Well, I’m sorry my son, but you’re too late in asking
Mister Peabody’s coal train has hauled it away
Well, sometimes we’d travel right down the Green River
To the abandoned old prison down by Adrie Hill
Where the air smelled like snakes and we’d shoot with our pistols
But empty pop bottles was all we would kill.
Then the coal company came with the world’s largest shovel
And they tortured the timber and stripped all the land
Well, they dug for their coal till the land was forsaken
Then they wrote it all down as the progress of man.
When I die let my ashes float down the Green River
Let my soul roll on up to the Rochester dam
I’ll be halfway to Heaven with Paradise waitin’
Just five miles away from wherever I am.
Here’s hoping the music wins!
Tags: austerity, capitalism, crisis, England
Both neoclassical economists and conservative politicians like to refer to one nation and shared hardships. But things are rarely unified or shared, especially when it comes to the effects of severe budget cuts.
That’s certainly true right now in the UK.
We know the comprehensive spending review will impact disproportionately on the poor, women, and teenagers and young adults. But here’s another broad index of unfairness that cuts uncomfortably across David Cameron’s one-nation rhetoric : the cuts will hit the north of England more harshly than the south.
There, it’s the opposite of Italy: it’s the Northern Question. According to the Institute for Public Policy Research,
This report explores the extent to which the Spending Review will ameliorate or exacerbate the North-South divide. In considering jobs, welfare, capital investment and public services it draws a stark conclusion: things look set to become significantly worse. It argues that the fundamental problem with the Spending Review – and the economic policy of the Coalition Government to date – is that it lacks an equally rigorous and challenging strategy for economic growth. In the absence of such a strategy it is argued that the North of England needs to seize the initiative itself and drive forward an economic agenda that liberates regional economic prosperity from the limitations of a Whitehall agenda tied to the demands of agglomeration in the Greater South East.
Why? They give 5 reasons:
1. Greater proportional job losses in the public and private sectors compared to other regions.
2. A larger proportion of people already out of work, who are more likely to be reliant on the welfare benefits and public services that are being cut.
3. A larger proportion of people claiming incapacity benefit/employment support allowance and lone parent benefits, many of whom will be required to actively seek work as a result of welfare reforms, adding further to the competition for jobs.
4. A weaker private sector, that is less ready to take up the slack in unemployment and where the ratio of job vacancies to job seekers is already higher than most other areas.
5. Significantly lower public investment compared to other regions.
The cities in the north are the ones most vulnerable to the budget cuts.
There’s nothing shared about the effects of the ConDem budget cuts—in terms of age, gender, class, or region. The nation will be even more divided, and hard times experienced by many but certainly not all, after their austerity budget is imposed.
Tags: capitalism, crisis, profits, unemployment, wages
The recovery continues, but only for those at the top. For everyone else, it’s a continuation of the Second Great Depression.
How do we know? Because wages are declining—both total and average—while top salaries—distributions of the surplus—are rising. David Cay Johnston has reported all the new data the mass media have decided not to report.
Every 34th wage earner in America in 2008 went all of 2009 without earning a single dollar, new data from the Social Security Administration show. Total wages, median wages, and average wages all declined, but at the very top, salaries grew more than fivefold. . .
Measured in 2009 dollars, total wages fell to just above $5.9 trillion, down $215 billion from the previous year. Compared with 2007, when the economy peaked, total wages were down $313 billion or 5 percent in real terms.
The number of Americans with any wages in 2009 fell by more than 4.5 million compared with the previous year. Because the population grew by about 1 percent, the number of idle hands and minds grew by 6 million. . .
Only 150.9 million Americans reported any wage income in 2009. That put us below 2005, when 151.6 million Americans reported wages, and only slightly ahead of 2004, when 149.4 million Americans held at least one paying job.
For those who did find work in 2009, the average wage slipped to $39,269, down $243 or 0.6 percent, compared with the previous year in 2009 dollars.
The median wage declined by the same ratio, down $159 to $26,261, meaning half of all workers made $505 a week or less. Significantly, the 2009 median wage was $37 less than in 2000.
What about those at the top?
The number of Americans making $50 million or more, the top income category in the data, fell from 131 in 2008 to 74 last year. But that’s only part of the story.
The average wage in this top category increased from $91.2 million in 2008 to an astonishing $518.8 million in 2009. That’s nearly $10 million in weekly pay!
You read that right. In the Great Recession year of 2009 (officially just the first half of the year), the average pay of the very highest-income Americans was more than five times their average wages and bonuses in 2008. And even though their numbers shrank by 43 percent, this group’s total compensation was 3.2 times larger in 2009 than in 2008, accounting for 0.6 percent of all pay. These 74 people made as much as the 19 million lowest-paid people in America, who constitute one in every eight workers.
So, there are more people without work, and those with a job are earning less. But the shrinking number of those at the top are getting more. Much, much more. Lower wages, higher surplus. Yep, that’s a capitalist recovery, U.S. style.
This series are all done on cardboard and depict the homeless. They are put up and are able to be taken down so that they can be taken home. They are therefore extremely delicate. It’s interesting because just like the actual homeless, the people on the street ignore the pieces and many times see no worth in them. However, Some people have and are encouraged to take these home where the pieces can survive.
Tags: capitalism, economics, neoclassical
Students at the University of California-Berkeley have launched the first salvo in an international movement to challenge neoclassical economics. They printed the Kick It Over Manifesto [pdf] on bright pink paper and pinned it to the door of Daniel McFadden, a Nobel Prize winner in economics [pdf], and to bulletin boards throughout the department.
The goal was to disrupt the obliviousness of students and teachers who preach the self-destructive consumerist lie that societies should pursue economic growth. It worked: the manifesto hit a nerve.
Within three hours, an adjunct professor emailed Adbusters to justify his approach to teaching economic theory. But he concluded with a defiant flare: “I have a fairly strong hunch that you are mistaken about the system crumbling, or the imminent loss of relevance of mainstream economics. In all likelihood my students will continue to have considerable influence on the body politic for many years to come.”
Here is the text of the manifesto:
We, the undersigned, make this accusation: that you, the teachers of neoclassical economics and the students that you graduate, have perpetuated a gigantic fraud upon the world.
You claim to work in a pure science of formula and law, but yours is a social science, with all the fragility and uncertainty that this entails. We accuse you of pretending to be what you are not.
You hide in your offices, protected by your mathematical jargon, while in the real world, forests vanish, species perish and human lives are callously destroyed. We accuse you of gross negligence in the management of our planetary household.
You have known since its inception that one of your measures of economic progress, the Gross Domestic Product, is fundamentally flawed and incomplete, and yet you have allowed it to become a global standard, reported day in, day out in every form of media. We accuse you of recklessly projecting an illusion of progress.
You have done great harm, but your time is coming to a close. Your systems are crumbling, your flaws increasingly laid bare. An economic revolution has begun, as hopeful and determined as any in history. We will have our clash of economic paradigms, we will have our moment of truth, and out of each will come a new economics–open, holistic, human‑scale.
On campus after campus, we will chase you old goats out of power. Then, in the months and years that follow, we will begin the work of reprogramming your doomsday machine.
The Real World Economics Review Blog lists 31 supporting links.
Tags: austerity, capitalism, crises, United Kingdom
Chancellor George Osborne yesterday announced the long-awaited drastic budget cuts in the ConDem big society = big market + small state program.
The budget review amounts to £81 billion in cuts, including “a package of £7 bn in extra welfare cuts on top of the £11bn already made in the last budget. This will include the withdrawal of £50 a week from the million people claiming incapacity benefit for more than a year.”
Politically, the Tories are trying to outflank Labour (which had already accepted the same paradigm and proposed to make equivalent budget cuts) and they’ve succeeded in undermining their LibDem coalition partners (who reneged on the their pledge not to raise university tuition fees).
Economically, the budget cuts threaten the slimmest of recoveries from the most severe crisis since the Great Depression. On Keynesian terms, it creates the conditions for a double-dip (for those at the top) and continued depression (for those at the bottom).
Socially, the budget review goes even farther down the road of starving the state and feeding the market started under Iron Lady Thatcher.
Their only problem is, having already gone far down that road, there’s not much left to privatize. So, all they can do to satisfy the banks is to cut the budget and destroy what remains of social services and higher education.
Their project is, then, an attempt to finish what the Tories started under Thatcher—to destroy society, which after all she famously denied even existed.