May 2012
9 posts
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How J.P. Morgan Chase Has Made the Case for...
J.P. Morgan Chase & Co., the nation’s largest bank, whose chief executive, Jamie Dimon, has led Wall Street’s war against regulation, announced Thursday it had lost $2 billion in trades over the past six weeks and could face an additional $1 billion of losses, due to excessively risky bets.
The bets were “poorly executed” and “poorly monitored,” said Dimon, a result of “many errors,...
Of Bedrooms and Boardrooms
The 2012 election should be about what’s going on in America’s boardrooms, but Republicans would rather it be about America’s bedrooms.
Mitt Romney says he’s against same-sex marriage; President Obama just announced his support. North Carolina voters have approved a Republican-proposed amendment to the state constitution banning same-sex marriage. Minnesota voters will be considering a similar...
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A Question of Timing: What America Can Learn from...
Who’s an economy for? Voters in France and Greece have made it clear it’s not for the bond traders.
Referring to his own electoral woes, Prime Minister David Cameron wrote Monday in an article in the conservative Daily Telegraph: “When people think about the economy they don’t see it through the dry numbers of the deficit figures, trade balances or inflation forecasts — but instead the things...
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The Answer Isn't Socialism; It's Capitalism that...
Francois Hollande’s victory doesn’t and shouldn’t mean a movement toward socialism in Europe or elsewhere. Socialism isn’t the answer to the basic problem haunting all rich nations.
The answer is to reform capitalism. The world’s productivity revolution is outpacing the political will of rich societies to fairly distribute its benefits. The result is widening inequality...
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The Stall Has Arrived
The economy has stalled.
Friday’s jobs report for April was even more disappointing than March. Employers added only 115,000 new jobs, down from March’s number (the Bureau of Labor Statistics revised the March number upward to 154,000, but that’s still abysmal relative to what’s needed). We need well over 250,000 new jobs per month in order to begin to whittle down the vast number of...
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Why the Economy is Heading for a Stall
We’ll know more tomorrow when the jobs report is announced, but today’s report on America’s massive service sector – which make up about 90 percent of the economy – is sobering to say the least.
The Institute of Supply Management’s non-manufacturing index fell to a four-month low in April (53.5, down from 56 in March – still positive territory but just barely). New orders dropped to their lowest...
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The Tinder-Box Society
The Dow Jones Industrial Average hit 13,338 Tuesday, its highest since December, 2007. The S&P 500 added 16 points. Wall Street will remember May 1 as a great day.
But most of these gains are going to the richest 10 percent of Americans who own 90 percent of the shares traded on Wall Street. And the lion’s share of the gains are going to the wealthiest 1 percent.
Shares are up because...
April 2012
24 posts
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Reddit AMA →
I’ll be answering questions on Reddit for the next few hours. Come join the discussion.
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The GOP's Death Wish: Why Republicans Can't Stop...
What are the three demographic groups whose electoral impact is growing fastest? Hispanics, women, and young people. Who are Republicans pissing off the most? Latinos, women, and young people.
It’s almost as if the GOP can’t help itself.
Start with Hispanic voters, whose electoral heft keeps growing as they comprise an ever-larger portion of the electorate. Hispanics now favor President Obama...
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How Europe's Double Dip Could Become America's
Europe is in recession.
Britain’s Office for National Statistics confirmed today (Wednesday) that in the first quarter of this year Britain’s economy shrank .2 percent, after having contracted .3 percent in the fourth quarter of 2011. (Officially, two quarters of shrinkage make a recession). On Monday Spain officially fell into recession, for the second time in three years. Portugal, Italy, and...
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Why Anyone Should Care that Bill O'Reilly Calls Me...
Bill O’Reilly, the tumescent personality of Fox News, said on his Friday show “Robert Reich is a communist who secretly adores Karl Marx.” (This came after Fox News’ Neil Cavoto called me a “sanctimonious twit” for suggesting the rich should pay more in taxes.)
O’Reilly’s accusation is odd, to say the least. If we were living in the 1950s, amid Senator...
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WatchRobert Reich on The Daily Show with Jon Stewart discussing his eBook Beyond Outrage. Be sure to also check out the extended interviews.
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Why "We're on the Right Track" Isn't Enough, and...
President Obama’s electoral strategy can best be summed up as: “We’re on the right track, my economic policies are working, we still have a long way to go but stick with me and you’ll be fine.”
That’s not good enough. This recovery is too anemic, and the chance of an economic stall between now and Election Day far too high.
Even now, Mitt Romney’s empty “I’ll to it better” refrain is attracting as...
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The Significance of Citigroup's Shareholder Revolt
The shareholders of Wall Street giant Citigroup are out to prove that corporate democracy isn’t an oxymoron. They’ve said no to the exorbitant $15 million pay package of Citi’s CEO Vikram Pandit, as well as to the giant pay packages of Citi’s four other top executives.
The vote, at Citigroup’s annual meeting in Dallas Tuesday, isn’t binding on Citigroup. But it’s a warning shot across...
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Thoughts on Tax Day 2012
As Justice Oliver Wendell Holmes, Jr., wrote in 1904, “taxes are the price we pay for a civilized society.”
But the wealthiest Americans, who haven’t raked in as much of America’s income and wealth since the 1920s, are today paying a lower tax rate than they have in over thirty years. Even though America faces a mammoth federal budget deficit. Even though public services at all levels of...
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Why a Fair Economy is Not Incompatible with Growth...
One of the most pernicious falsehoods you’ll hear during the next seven months of political campaigning is there’s a necessary tradeoff between fairness and economic growth. By this view, if we raise taxes on the wealthy the economy can’t grow as fast.
Wrong. Taxes were far higher on top incomes in the three decades after World War II than they’ve been since. And the distribution of income was far...
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Why the Buffett Rule Sets the Bar Too Low
Next Monday most Americans will be filing their income taxes for tax year 2011. This year, though, tax day has special significance. If there’s one clear policy contrast between Democrats and Republicans in the 2012 election, it’s whether America’s richest citizens should be paying more.
Senate Democrats have scheduled a vote Monday on a minimum 30 percent overall federal tax rate for...
What Today's Job Numbers Mean
The economy added only 120,000 jobs in March – down from the rate of more than 200,000 in each of the preceding three months. The rate of unemployment dropped from 8.3 to 8.2 percent mainly because fewer people were searching for jobs – and that rate depends on how many people are actively looking.
It’s way too early to conclude the jobs recovery is stalling, but there’s reason for concern.
...
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The Fable of the Century
Imagine a country in which the very richest people get all the economic gains. They eventually accumulate so much of the nation’s total income and wealth that the middle class no longer has the purchasing power to keep the economy going full speed. Most of the middle class’s wages keep falling and their major asset – their home – keeps shrinking in value.
Imagine that the richest people in this...
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The Choice in 2012: Social Darwinism or a Decent...
The returns aren’t all in yet on today’s Republican primaries but President Obama didn’t wait. He kicked off his 2012 campaign against Mitt Romney with a hard-hitting speech centered on the House Republicans’ budget plan – which Romney has enthusiastically endorsed.
That plan, by the way, is the most radical reverse-Robin Hood proposal propounded by any political party in modern America. It would...
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Turning America Into a Giant Casino
Anyone who says you can get rich through gambling is a fool or a knave. Multiply the size of the prize by your chance of winning it and you’ll always get a number far lower than what you put into the pot. The only sure winners are the organizers – casino owners, state lotteries, and con artists of all kinds.
Organized gambling is a scam. And it particularly preys upon people with lower incomes –...
March 2012
12 posts
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Whose Recovery?
Luxury retailers are smiling. So are the owners of high-end restaurants, sellers of upscale cars, vacation planners, financial advisers, and personal coaches. For them and their customers and clients the recession is over. The recovery is now full speed.
But the rest of America isn’t enjoying an economic recovery. It’s still sick. Many Americans remain in critical condition.
The Commerce...
Break Up The Big Banks, Says the Dallas Fed
As the Supreme Court shows every sign of throwing out “Obamacare” and leaving 30 million Americans without health insurance, another drama is being played out in the quiet corridors of the Federal Reserve system that may affect even more of us.
Taxpayers will be on the hook for another giant Wall Street bailout, and the economy won’t be mended, unless the nation’s biggest...
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Healthcare Jujitsu
Not surprisingly, today’s debut Supreme Court argument over the so-called “individual mandate” requiring everyone to buy health insurance revolved around epistemological niceties such as the meaning of a “tax,” and the question of whether the issue is ripe for review.
Behind this judicial foreplay is the brute political fact that if the Court decides the individual mandate is an...
Why Mitt Won't Be Able to Hide From His Primary...
Romney spokesman Eric Fehrnstrom couldn’t have said it better – or worse. When asked by CNN Wednesday morning whether Mitt was being pushed so far to the right by Rick Santorum and Newt Gingrich that he’d be handicapped in the general election, Fehrnstrom said “you hit a reset button for the fall campaign. Everything changes. It’s almost like an Etch-A-Sketch. You kind of shake it up and...
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The Republican's Social-Darwinist Budget Plan
In announcing the Republicans’ new budget and tax plan Tuesday, House Budget Committee Chairman Paul Ryan said “We are sharpening the contrast between the path that we’re proposing and the path of debt and decline the president has placed us upon.”
Ryan is right about sharpening the contrast. But the plan doesn’t do much to reduce the debt. Even by its own estimate the deficit...
What Republicans Argue When They Have Nothing Left...
Republicans are desperate. They can’t attack Obama on jobs because the jobs picture is improving.
Their attack on the Administration’s rule requiring insurers to cover contraception has backfired, raising hackles even among many Republican women.
Their attack on Obama for raising gas prices has elicited scorn from economists of all persuasions who know oil prices are set in global markets and...
If You Took the Greed Out of Wall Street, All...
Greg Smith, a Goldman Sachs vice president, resigned his post Wednesday with a stinging public rebuke of the firm on the oped page of the New York Times — accusing it of no longer putting its clients before its own pecuniary goals.
But if Mr. Smith believes his experience at Goldman is something new, he doesn’t know history. In 1928, Goldman Sachs and Company created the Goldman...
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Why Republicans Aren't Mentioning the Real Cause...
Gas prices continue to rise, which is finally giving Republicans an issue. Mitt Romney is demanding the President open up more domestic drilling; the super PAC behind Rick Santorum just released a new ad in Louisiana blasting the President on gas prices; and the GOP is attacking the White House on the Keystone XL Pipeline.
But the rise in gas prices has almost nothing to do with energy policy....
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The Difference Between Private and Public Morality
Republicans have morality upside down. Santorum, Gingrich, and even Romney are barnstorming across the land condemning gay marriage, abortion, out-of-wedlock births, access to contraception, and the wall separating church and state.
But America’s problem isn’t a breakdown in private morality. It’s a breakdown in public morality. What Americans do in their bedrooms is their own business. What...
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The Widening Wealth Divide, and Why We Need a...
Let Santorum and Romney duke it out for who will cut taxes on the wealthy the most and shred the public services everyone else depends on.
The rest of us ought to be having a serious discussion about a wealth tax. Because if you really want to know what’s happening to the American economy you need to look at household wealth — not just incomes.
The Fed just reported that household wealth...
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The Precarious Jobs Recovery
February’s 227,000 net new jobs – the third month in a row of job gains well in excess of 200,000 – is good news for President Obama and bad news for Mitt Romney.
Jobs are coming back fast enough to blunt Republican attacks against Obama on the economy and to rob Romney of the issue he’d prefer to be talking about in his primary battle against social conservatives in the GOP.
But jobs...
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Bye Bye American Pie: The Challenge of the...
Here’s the good news. The economic pie is growing again. Growth in the 4th quarter last year hit 3 percent on an annualized rate. That’s respectable – although still way too slow to get us back on track given how far we plunged.
Here’s the bad news. The share of that growth going to American workers is at a record low.
That’s largely because far fewer Americans are working. Although the nation...
February 2012
11 posts
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Stop Starving Public Universities and Shrinking...
Last week Rick Santorum called the President “a snob” for wanting everyone to get a college education (in fact, Obama never actually called for universal college education but only for a year or more of training after high school).
Santorum needn’t worry. America is already making it harder for young people of modest means to attend college. Public higher education is being starved,...
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No Longer Home Sweet Home: The Ongoing Housing...
Economic cheerleaders on Wall Street and in the White House are taking heart. The US has had three straight months of faster job growth. The number of Americans each week filing new claims for unemployment benefits is down by more than 50,000 since early January. Corporate profits are healthy. The S&P 500 on Friday closed at a post-financial crisis high.
Has the American recovery finally...
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As Santorum and Romney Battle for the Loony Right,...
My father was a Republican for the first 78 years of his life. For the last twenty, he’s been a Democrat (he just celebrated his 98th.) What happened? “They lost me,” he says.
They’re losing even more Americans now, as the four remaining GOP candidates seek to out-do one another in their race for the votes of the loony right that’s taken over the Grand Old Party.
But the rest...
Corporations Don't Need a Tax Cut, So Why Is Obama...
The Obama administration is proposing to lower corporate taxes from the current 35 percent to 28 percent for most companies and to 25 percent for manufacturers.
The move is supposed to be “revenue neutral” – meaning the Administration is also proposing to close assorted corporate tax loopholes to offset the lost revenues. One such loophole allows corporations to park their earnings...
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The GOP's Big Investors
Have you heard of William Dore, Foster Friess, Sheldon Adelson, Harold Simmons, Peter Thiel, or Bruce Kovner? If not, let me introduce them to you. They’re running for the Republican nomination for president.
I know, I know. You think Rick Santorum, Newt Gingrich, Ron Paul, and Mitt Romney are running. They are – but only because the people listed in the first paragraph have given them huge sums...