"He has blundered into a deepening quagmire in Afghanistan, has continued the Bush policy of buying off Wall Street hustlers instead of confronting them and is now on the cusp of bargaining  away the so-called public option, the reform component of his health care program."

Robert Scheer,  Obama's Presidency Isn't Too Big to Fail

The New Democrat is the Old Republican. Just as the Old Republicans devolve into some sort of deranged regional Confederate Party full of Michael Douglas' "Falling Down" character, taking the perceived demise of the white male in society as some sort of personal attack on their world.

The religious fanatics populating the Old Republicans are an angry unintelligible mass of screamers without logic. Raised by not sparing the rod, these beaten little Christers are now lashing out in the anger as the adults of abused children. The abused become the abusers in Max Blumenthal's well researched analysis of the angry white mobs of the Christian right... the New Confederate Party.

The New Democrat is really the old Rubin-McAuliffe corporate Democrat. McAuliffe whose guiding political philosophy is "Hey pal, payola for me not the other guy's party..." witnessed for the first time in 2006 Democrats receiving more campaign bribes from corporations than the Republicans by 60% to 40% advantage. Pelosi and Reid behaved like it. Not able to find the votes to stop anything or for any traditional Democrats populace position promised in the elections. From 2006 to 2008, Reid and Pelosi's marching orders came from their corporate owners whose bidding was carefully followed with excuses to the public.

So why would Wall Street and corporate power hand $600 million for a presidential campaign to an obscure first term center from Illinois with political speeches like these?

"This is a verdict on the failed policies of the last eight years that said that we should strip away consumer protections, let the market run wild, and prosperity would rain down."

"You've got to have somebody in Washington who is thinking about the middle class and not just those who can afford to hire lobbyists."

"It's not enough just to help those at the top. Prosperity is not just going to trickle down."

"The problem we have is that Washington has become a place where good ideas go to die. They  go to die because the lobbyists and special interests have a strangle-hold on the agenda in Washington."

"We'll make it clear to the special interests that their days of setting the agenda in Washington are over, because the American people are not the problem in this 21st century--they are the answer."

"Let's, first of all, understand that the biggest problem in this whole process was the deregulation of the financial system. Sen. McCain, as recently as March, bragged about the  fact that he is a deregulator. On the other hand, two years ago, I said that we've got a sub-prime lending crisis that has to be dealt with."

FHA-Backed Loans: The New Subprime

"Washington, meanwhile, has vastly expanded the availability of such taxpayer-backed loans as part of the emergency campaign to rescue the country's swooning economy."

"Their new strategy: taking advantage of a long-standing federal program designed to    encourage homeownership by insuring mortgages for buyers of modest means."

"You read that correctly. Some of the same people who propelled us toward the housing market calamity are now seeking to profit by exploiting billions in federally insured mortgages."

"A year ago, I went to Wall Street and said we've got to reregulate, and nothing happened."

Mr. Change, Presidential Debate, University of Texas, Austin, February 21, 2008.

"Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some but also our collective failure to make hard choices and prepare the nation for a new age."

"The state of our economy calls for action: bold and swift."

"But this crisis has reminded us that without a watchful eye, the market can spin out of control. The nation cannot prosper long when it favors only the prosperous."

"To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history..."

Allow me to retort, Mr. President.

In response to Obama's speech on Wall Street, September 15, 2009. Professor of Economics, Columbia University, Joseph Stiglitz in the UK Guardian:

"Last night Barack Obama defended his administration's response to the financial crisis, but the reality is that a year on from Lehmans' collapse, it has failed to take adequate steps to restrict institutions' size, their risk-taking, and their interconnectedness. Indeed, it has allowed the big banks to become even bigger - just as it has failed to stem the flow of profligate executive bonuses. Obama's call on Wall Street yesterday to support "the most ambitious overhaul of the financial system since the Great Depression" is welcome - but the devil, as ever, will be in the detail."

"But the Obama administration has created a new concept: institutions too big to be resolved, too big for capital markets to provide the necessary discipline. The perverse incentives for excessive risk-taking at taxpayers' expense are even worse with the too-big-to-be-resolved banks than they are at the too-big-to-fail institutions. We have signed a blank cheque on the public purse. We have not circumscribed their gambling - indeed, they have access to funds from the Fed at close to zero interest rates, and it appears that "trading profits" have (besides "accounting" changes) become the major source of returns."

"I fear that our collective response has been mistaken and inadequate - that we may just have made matters worse. The financial sector would like us to believe that if only the Federal Reserve and the Treasury had leapt to the rescue of Lehman all would have been fine. Sheer   nonsense. Lehmans was not a cause but a consequence: a consequence of flawed lending practices, and of inadequate oversight by regulators.

From Bill Moyers April 2009 interview with Professor Black, Bill Moyers Journal, PBS

Moyers' Introduction:

"William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri -- Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law..."

"Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC...and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on  Financial Institution Reform, Recovery and Enforcement."

"Black developed the concept of "control fraud" -- frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined...and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management."

WILLIAM K. BLACK: Geithner is charging, is covering up. Just like Paulson did before him. Geithner is publicly saying that it's going to take $2 trillion -- a trillion is a thousand billion -- $2 trillion taxpayer dollars to deal with this problem. But they're allowing all the banks to report that they're not only solvent, but fully capitalized. Both statements can't be true. It can't be that they need $2 trillion, because they have masses losses, and that they're fine.

WILLIAM K. BLACK: These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed, not because...

BILL MOYERS: What do you mean?

WILLIAM K. BLACK: Well, Geithner has, was one of our nation's top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. All this pig in the poke stuff happened under him. So, in his phrase about legacy assets. Well he's a failed legacy regulator.

BILL MOYERS: But he denies that he was a regulator. Let me show you some of his testimony before Congress. Take a look at this.

TIMOTHY GEITHNER: I've never been a regulator, for better or worse. And I think you're right to say that we have to be very skeptical that regulation can solve all of these problems. We have parts of our system that are overwhelmed by regulation.

Overwhelmed by regulation! It wasn't the absence of regulation that was the problem, it was despite the presence of regulation you've got huge risks that build up.

WILLIAM K. BLACK: Well, he may be right that he never regulated, but his job was to    regulate. That was his mission statement.

 ...WILLIAM K. BLACK: I think, first, the policies are substantively bad. Second, I think they completely lack integrity. Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they're refusing to obey the law.

BILL MOYERS: In other words, they could have closed these banks without nationalizing them?

WILLIAM K. BLACK: Well, you do a receivership. No one -- Ronald Reagan did receiverships.Nobody called it nationalization.

BILL MOYERS: And that's a law?

WILLIAM K. BLACK: That's the law.

BILL MOYERS: So, Paulson could have done this? Geithner could do this?

WILLIAM K. BLACK: Not could. Was mandated--

BILL MOYERS: By the law.

WILLIAM K. BLACK: By the law.

BILL MOYERS: This law, you're talking about.

WILLIAM K. BLACK: Yes.

BILL MOYERS: What the reason they give for not doing it?

WILLIAM K. BLACK: They ignore it. And nobody calls them on it. 

"We have failed bankers giving advice to failed regulators on how to deal with failed assets. How can it result in anything but failure?"

"If they are going to get any truthful investigation, the Democrats picked the wrong financial team. Tim Geithner, the current Secretary of the Treasury, and Larry Summers, chairman of the National Economic Council, were important architects of the problems. Geithner especially represents a failed regulator, having presided over the bailouts of major New York banks."

"Geithner has appropriated the language of his critics and of the forthright to support dishonesty. That is what's so appalling -- numbering himself among those who convey tough medicine when he is really pandering to the interests of a select group of banks who are on a first-name basis with Washington politicians."

As astute financial blogger Jesse from Jesses Café American notes:

Stock Market Rally: Shenanigans Abound

"Obama and his team have NO credibility for reform on Wall Street after their handling of  Goldman Sachs and the AIG payouts."

"Inflation is good for financial assets, and we think another bubble is in the cards, at least for now given Obama's unwillingness to reform, unless some exogenous event or actor intervenes."

Is Jesse alone? Analyst Larry Doyle from "Sense on Cents" Whatever Happened to Financial Reform

"Today President Obama will make a campaign stop on Wall Street to promote his calls for financial regulatory reform. We will receive the standard platitudes. Obama will likely recruit a few high profile Wall Street executives to support his initiatives or lack thereof. The fact is, Wall Street has been working diligently to make sure that ultimately "business as usual" carries the day." 

Kevin Depew at Minnyanville, Five Things: The Myths of the Crisis

"Think about it this way. The word credit comes from the Latin "credere," which means, literally, "to believe, or to trust." That is really all you need to know about the modern financial system. When the credere is gone, the whole thing unravels, and it works both ways, from lender to borrower, and from borrower to lender. This is why monetary and fiscal policies aren't working."

"Well, unfortunately, we're rapidly moving right back to the same place we were before the real issues facing us in The Crisis became apparent. In other words, all that has happened is that the doctor (the government) has been successful in treating the symptoms of the disease (failed institutions and widespread insolvency), but in doing so the disease itself (too much debt) has actually worsened."

Wall Street Reform- Mr. Slick gets an "F"

"We are at a defining moment in our history, going through the worst financial crisis since the  great depression..."

Oh really? You could not tell by the Obama lack of action, the sin of omission.

So how does an eloquent speech delivering academically accomplished graduate from Harvard Law mislead those who voted for him on the true intent of his policies?

Like Reid and Pelois who have been in control of Congress since 2006 but yet just can't seem to find the votes on any of those supposed positions of the Democratic Party...

Mr. Change simply fails at all those promises of Wall Street reform, ending imperial wars for profit at tax payer expense and now the most stark failure to put forward any measure of health care reform. The New Democrats know who their corporate masters are and now do the bidding of Wall Street and corporate power by selling out the American public at every turn.

Mr. Change ran a campaign of implication. He IMPLIED to progressive voters that he was all about "fairness" and Wall Street reform. He campaigned repeatedly on the excess of greed and reform to help main street. He parsed his words, made vague implications.

Once elected he claimed we all just did not hear what he said...

Mr. Change ran a campaign calling for the end to unjust wars that the American public was lied into by the installed Junta regime of Bush the Dunce. Mr. Change campaigned long and loud about how he had voted against Congressional approval for the Iraq war, while his opponent from Clinton time had been a war monger.

Once elected he claimed we all just did not hear what he said...

Mr. Change campaigned on Health care for all. Mr. Change campaigned on reform of the current rip off system that enriches health insurance corporations while denying treatment to those with insurance and dumping any one with an anything as pre existing condition from the roles after taking their premiums year after year in a criminal cabal of rip off. Mr. Change even campaigned for universal single payer.

Once elected he claimed we all just did not hear what he said...

Now progressives may start to be getting the picture. Mr. Change is in fact Mr. Corporate, Mr. Tool of Wall Street.

Mr. Change is careful. He is a word parser and clever dealer in logic and implication when speaking. He continually tells those who voted for him that it is their fault they implied what was not there. The biggest and most useful weapon of Mr. Change for his Wall Street and Corporate masters against the American people is his sin of omission.

It is more important what Mr. Change DOES not do rather than continuing to buy the kool-aid and listen to those eloquent speeches of high rhetoric. He talks major reform but some how never acts or accomplishes. This is the pattern. Talk the big game but never do anything.

This has been the Pelosi/Reid MO since being given a majority in 2006. Mr. Change has embraced this style of inaction as cover for the looting of the American public by Wall Street, continuing foreign wars for corporate profit that bleed the American tax payer and kill the sons and daughters of the less advantaged.

Now what may be the final straw to the American public... Health Care Reform that wasn't. It won't kick in until 2013 once Mr. Change is safely reelected. Then the big screw turns. Simply look at the Willard "the Rat" Romney Massachusetts plan of forced public purchase of private policies with no reform of the corrupt health insurance industry. Premiums are going up at 10% a year including a 9% increase this year.

Even with the careful timing of the "big health care screw," progressives and independents must be starting to catch on. Mr. Change is in fact Mr. Slick, a flim flam man, a con artist a bull shitter. Of the big three campaign themes of Mr. Slick, the economy, Wall Street reform, ending unjust wars and health care "reform," the first big failure of Mr. Slick is lack of Wall Street reform.

Mr. Slick allowed his minions to use Fed monetary policy to flood the investment banks with capital. Being the greedy worms they are, Wall Street banks leveraged the cash like crazy and went on an equity market pumping binge. Summers et al do know one thing... higher stock prices mean higher consumer confidence. As Summers and the boys love to trot out these two pointless statistics along with a host of BLS manipulated economic statisitics unemployment (way too low), GDP (way too high), CPI (way too low)...

Is there a pattern here? Can you believe any statistic or green shoot report out of this government or corporate owned news media?

The Great Transformation: Mr. Change to Mr. Slick

Photo: Courtesy Jesse's Cafe Americain

"The Obama Economics and Regulatory Team, in conjunction with the Federal Reserve, have accomplished no serious reform of the fiancial system. They have enabled the type of market inefficiency, soft fraud and price manipulation that is undermining global confidence in the integrity of US markets and financial products. And they have advanced a proposal to consolidate a huge amount of regulatory power under the Federal Reserve, a private banking agency that was at the root of our unfolding financial crisis.

The time has passed when Obama could have pointed to the past mistakes of his predecessors as the fault for our problems. Thanks to Tim Geithner, Barney Frank, and Larry Summers he now owns the financial crisis, and the coverups, policy errors, scandals, conflicts of interest and bailouts that have occurred since he has taken office. His reappointment of Ben Bernanke as Federal Reserve chairman most surely tied a bow on his ownership package for the crisis, which is in danger of becoming his 'financial New Orleans.'

Wall Street insiders and their enablers pig out on public money while the nation suffers. This is not change, this is business as usual."

Jesse: August 9, 2009, US Equity Markets Look Dangerously Wobbly As Insiders Sell In Record Numbers

Once upon a time Reagan and the conservative Republicans looked Madison Avenue slick thanks to the backing of Wall Street worm and CIA criminal Bill Casey and Alfred Bloomingdale. Reagan and his cronies looked smart, competent, man with the plan. In contrast, Mondale, Tip O'Neil and Michael Dukakis could not come up with a plan to tie their own shoes on time.

So what has changed? Now it is Democrats who appear Madison Avenue slick, smart, competent, men and women with the plan. By contrast Boehner (pronounced Bone-er) and Cantor can't even stand in front of the press with a budget plan that has any numbers inside... just a cartoon cover, a National Chairman so policy dumb and contradiction challenged that he makes less sense than the guests on Jerry Springer...

These are the same Republicans that looked so smart just two decades ago and Democrats that looked so dumb. It is the same people...people. So what changed? Nothing. Just the big money propaganda switched sides to buy the other brand and sell it to you as something new Madison Avenue style. It is working as the new brand of Kool-Aid, the super popular brand even in the face of over whelming evidence that the new Kool-Aid is just some cheap powder in a bag that is not to our benefit, just the benefit of elite wealth who own this government and the country.

It is in fact the same old soak the working class and screw us until we melt policy.

Mr. Slick says that is change you and I can believe in. 

Here is change I can believe in:

This is why we like Bill the Brain at Calculated Risk.

Bill writes excellent analysis on economic issues and trends in general, mortgages, foreclosures in particular with great clarity. Now that I praised Bill's clarity, under the odd title "Another Involuntary Landlord and Summary"...Bill covers unemployment with his usual insight and links to his previous top notch posts on the subject.

Another Involuntary Landlord and Summary

The National Association of Homebuilders, National Housing Center in Washington DC.

But I thought sentiment among homebuilders was up on increasing month over month new home sales??

As Bill has taught me... Real Estate is cyclical on an annual basis. Sales always go up in April through August. People always try to buy and get moved in before school starts for their kids and/or the holiday season. These trends have repeated in the US, year after year, decade after decade. Believe the trend line.

Never pay attention to month over month, always pay attention to year over year... this month last year. Month over month is used to mislead... like the National Association of Realtors and Homebuilders.

Bill on unemployment:

Courtesy Calculated Risk

Unknown to the American public, historical perspective is important because so much of what happens today, is path dependent on past political and economic decisions. Path Dependency is real. We will look at good ol' Glass-Steagall here shortly...

I think it was Gore Vidal who coined the phrase "Citizens of the United States of Amnesia" for their unfailing lack of forgetting what happened yesterday. Those who defraud the American public count on that.

In one of the links below the chart, Bill gives a good break down on how unemployment is spread among different industries in the US economy:

Unemployment: Stress Test Scenarios, Diffusion Index, Weekly Claims

Here is a look at how "widespread" the job losses are using the employment diffusion index from the BLS...

Before September, the all industries employment diffusion index was close to 40, suggesting that job losses were limited to a few industries. However starting in September the diffusion index plummeted. In December, the index hit 20.5, suggesting job losses were very widespread. The index has recovered since then, but declined slightly in June to 28.6, suggesting job losses are still widespread.

However job losses have really picked up over the last 9 months (4.4 million jobs lost, red line cliff diving on the graph), and the current recession is now the 2nd worst recession since WWII in percentage terms - and also in terms of the unemployment rate (only early '80s recession was worse).

On unemployment insurance: Notice a nice chart showing both initial and continuing unemployment insurance claims since 1971.

Employment-Population Ratio, Part Time Workers, Hours Worked

In this post, Bill analyzes hours worked and those forced to work part time, either because they are full time employees who have been cut  to part time or were hired part time because that was all that was available. Why should part time workers be an issue in the unemployment numbers? Have you ever tried paying your rent or more importantly in this foreclosure environment, your mortgage with part time wages? Part time employment might just affect economic conditions after all...

So why exclude part time from the U3 unemployment numbers? Why exclude people who have run out of unemployment insurance? Why invent job creation (Birth/Death Ratio) that your payroll data and 60k a month household survey has allegedly missed? Add 1.3 million jobs in a single year (Bush Jr. 2007) ?

Two great charts:

Part Time Unemployment: 

Employment-Population Ratio

The general upward trend from the early '60s was mostly due to women entering the workforce. As an example, in 1964 women were about 32% of the workforce, today the percentage is close to 50%.

This measure is at the lowest level since the early '80s and shows the weak recovery following the 2001 recession - and the current cliff diving!

Part Time for Economic Reasons (sometimes referred to as involuntary part-time workers)

Not only has the unemployment rate risen sharply to 9.5%, but the number of workers only able to find part time jobs (or have had their hours cut for economic reasons) is at 9.0 million.

You can find analysis on increasing year over year personal bankruptcies in June, up 40%...

 Then move on to "Naught for the Naughts" Just an observation ..."

 Naught for the Naughts?

On the '00s (the "Naughts") ...

Employment Dec 1999: 130.53 million

Employment Jun 2009: 131.69 million

A gain of just 1.16 million. What are the odds that the economy loses another 1.16 million jobs over the next 6 months? Pretty high. That would mean no net jobs added to the economy for the naughts:

Naught for the Naughts!

Mr. Bill on education: Really his blog is to inform the public on economic issues. In that regard if you click:

The Compleat UberNerd

From December 2006, until she passed away from ovarian cancer on Nov 30, 2008, Tanta was my co-blogger. Tanta worked as a mortgage banker for 20 years, and we started chatting in early 2005 about the housing bubble and the changes in lending practices.

 In Memoriam: Doris "Tanta" Dungey

The UberNerd Collection:

Mortgage Servicing

Negative Amortization

Private Mortgage Insurance I

Private Mortgage Insurance II

Foreclosure and REO

MBS I

MBS II

MBS III

Delinquency and Default

Reverse Mortgages

Leverage, Ratings, and Forced Unwind

Mortgage Origination Channels

These are all worth taking the time to read to better understand this "once in century" economic calamity that no one could see coming... fraudsters never want to see a good thing coming, huh Wall Street?

For a little foreclosure lunacy and sarcastic comments with facts and figures, click on "Jim The Realtor" on the right margin.

Note: Jim's link seems to move. The Calculated Risk list of Jim's postings:

Calculated Risk list of Jim the Realtor videos

Jim works in San Diego handling a lot of banked owned foreclosures. While Jim video tapes, he gives a run down on the property, the facts, figures and assessment of what is going on. His commentary is both hilarious and truly astounding. He critiques banks that are too cheap to paint or repair foreclosures so they can sell, to the original purchase prices, how may refinances and how each particular foreclosure ended up where it did.

His latest video documents a rash of foreclosures and NOD's on upper end homes in the over $1 million price range.

 Jim TV SD Pre-Foreclosure Tour

If you watch the series of Jim's videos as a whole they are quite educational. From the low end and investor rental end of the market, to the upper end 4k square footers and unscrupulous new home development deals... with brand new houses foreclosing less than a year after they sold... it gives you a whole new perspective on the foreclosure problem, the lack of regulation at all levels and top down securitization greed from Wall Street that got us into this fine mess.

All of Jim's videos:

Jim the Realtor

Got to love Jim the Realtor... and Bill the Brain at Calculated Risk.

Back to math...