That was the week that was

Posted: 19 March 2012 in Uncategorized
Tags: , , , , , , , , , , ,

That was the week that was,
It’s over let it go,
Oh what a week that was
That was the week that was!!!!!!!!!

Ignoring that sage advice, here I go. . .

Greg Smith left Goldman Sachs with the letter read ’round the world.

Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

David Cay Johnston reminded us that, in the midst of the Second Great Depression (and in contrast to what happened in the First Great Depression), the richest keep getting richer.

Robert J. Samuelson still doesn’t understand what caused the crisis of 2007-08.

Booms become busts because justifiable confidence becomes foolish optimism. So it was. Believing the world less risky, people took more risks. Investment banks and households increased their debt. Lending standards eroded, because borrowers’ repayment prospects were thought to have improved. Regulators relaxed oversight, because markets seemed more stable and self-correcting. On the fringes, ethical standards frayed; criminality increased. The rest, as they say, is history.

My old friend Tom Andrews was George Clooney’s cellmate.

What I found was a decent, level-headed, very knowledgeable and very down-to-earth guy. He was a key figure in the Save Darfur effort, had just returned from Sudan, and had thought a lot about what to do to avert the imminent danger of hundreds of thousands of innocent people being starved to death by the same man responsible for the genocide in Darfur. And he had also thought about strategy — including what is needed not only to draw a crowd of reporters in Washington, but how to get the horror of what is happening in Sudan firmly into public consciousness, and how to translate that into the political will to do what needs to be done.

Martin Feldstein continues to repeat the right-wing mantra that tax hikes are a bad thing.

Looking to the future, there are strong headwinds that will make it difficult to achieve a robust recovery. Higher petrol prices will reduce real incomes and cut spending on domestic goods and services. The weaknesses in many European economies will cut US exports to those countries.

But the most important cloud on the horizon is the large tax increase that will occur next year unless there is legislation to block it.

The new chapter by Greg Mankiw on the financial system is actually the same old nonsense about efficiently linking savers with investors.

The financial system is the broad term for the institutions in the economy that facilitate the flow of funds between savers and investors. That is, the financial system brings people like Larry and people like Patti together.

Edward Luce explains that, when it comes to thinking about capitalism in crisis, there is an alternative to the right-wing “purgatives” and the liberal “restoratives”: the “new foundationists.”

Their view is that the US – and other developed economies – needs to renovate the building. American capitalism was already failing to cater to the majority before the 2008 crisis, they argue.They have a lot of evidence on their side. Before the meltdown, median incomes had already dropped in the 2002-2007 business cycle, which was unique for a developed capitalist economy in the last three generations. Since then, things have got worse. According to the Bureau of Labor Statistics, US weekly median incomes have fallen by two per cent since the US recession officially ended in mid-2009. Incomes are supposed to rise in a recovery.

Meanwhile, mainstream economists, like Miranda Xafa, continue to believe that the problems in Greece stem from over-regulation.

Exiting the Eurozone would only add to the debt burden without resolving Greece’s competitiveness problem, which stems primarily from regulatory barriers to competition, restrictive labour practices, and red tape that raise the cost of doing business.

Another one of those same mainstream economists, Raghuram Rajan, believes that the problem is not inequality per se or the concentration of income at the top but the “keeping up with the Vanderbilts” behavior of the non-rich.

the non-rich (but not the really poor) living near high-spending wealthy consumers tended to spend much more on items that richer households usually consumed, such as jewelry, beauty and fitness, and domestic services. Indeed, many borrowed to finance their spending, with the result that the proportion of poorer households in financial distress or filing for bankruptcy was significantly higher in areas where the rich earned (and spent) more. Were it not for such imitative consumption, non-rich households would have saved, on average, more than $800 annually in recent years.

While the AFL-CIO does understand that that “the crash of 2008 and the Great Recession were inevitable consequences of three decades of economic policies designed by and for Wall Street and the wealthiest Americans,” it suggests little more than attacking China and restoring U.S. manufacturing.

we need to start making things in America again. We cannot hope to revive U.S. manufacturing without bringing our trade deficit under control, which means ending the overvaluation of the U.S. dollar and combating currency manipulation by our trading partners.  We will also need to enhance Buy America safeguards, aggressively enforce our trade laws and end incentives for offshoring in the tax code and in our trade agreements.

And, finally, dozens of protestors were arrested in Zuccotti Park during a protest to mark the six-month anniversary of the Occupy Wall Street movement.

That was the week that was. Now that I’ve had my say, I can let it go. . .

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