The_Letter_B's Blog

On Berlin

2009-11-09T14:22:01Z

A profound reason why the fall of the Berlin Wall is not celebrated in Germany as many think it should be (i.e. as a yearly holiday akin to the Fourth of July), is that the duality of human nature is strikingly burned into the history of this day. November 9 should be a day of quiet reflection, for the day embodies both both the great and diabolical deeds of which we are capable. 71 years ago today, the night of November 9, 1938, the National Socialists ran through the streets of "the Reich" pillaging and destroying. Today, in the memory of many Germans and Jews, is not only the joy of that day of freedom in 1989 present, but so too is the frightful memory of that first great pogrom of the Holocaust, Kristallnacht (the Night of the Broken Glass).

David Brooks' Frustration

2009-07-21T14:14:00Z

In response to David Brooks'

I am paying an effective tax rate now of 49% of my income and I am 1% off the top tax bracket, despite being far from a top earner due to Germany's cold progressive tax (adjustments for changes in standard of living are a good thing Ms. Merkel), which is a lot harsher than when one hits the top tax bracket in the US (which tends to be well above $100,000 per year). The one benefit is that I am insured, as is the whole country, and living in a place that is on the cutting edge of green technology, a direct by-product of government investment. Were it also not for the crisis, Germany would have had a balanced budget this year if not a surplus like last year. Good governance is expensive, just like good financial advice or legal representation; Goldman or J.P. Morgan won't manage my portfolio for pro bono despite my requests.

I don't know much about the efficacy of the tax collectors in France, but I know in Italy, according to the Economist, if they were able to collect all the taxes that are due, the budget would be balanced and they could lower taxes across the board, indicating that what is on the books and what is collected are two different stories, which should make your blood boil at an even higher temperature. But, to think that taxes won't be raised is silly. Services cost money. But, if health care reform is achieved, and a public plan is as effective as Medicare (over $.90 of each $1 goes directly to medical services delivered as opposed to less than $.70 in the private sector) and spending is brought under control, wages should increase as industry won't be forced to direct increased compensation into continued medical coverage as opposed to higher salaries. In other words, higher taxes but with a net financial benefit (I would much rather make 10000 at 55% than 7000 at 40%).

But, taking NY and CA as examples for zour larger point, both are in a budget crisis and the situation in NYC is particularly acute. Adding a VAT and increasing local and state taxes are the only practical methods available to the areas, resulting in zour numbers (55% is after all Fed Tax + State Tax + Local Tax + S.S. + Smiling Tax + Happiness Tax + Unhappiness Tax + etc.). The problem is that the increases in local and state taxes will hit consumption hard, amplifying the effects of the recession as the US has a consumption driven economy (not necessarily a good thing but that is another point).This is in part why Roubini and Krugman called for a much larger stimulus than was offered (check out their discussion in the New York Review of Books a few months back), as they anticipated much harsher unemployment numbers and a slower recovery than the Congress. A larger stimulus, one targeting full employment (with an anticipated unemployment rate of 10%), would have helped increase consumption by allowing people that have been removed from the market to begin participating again, stirring demand, the economy and increasing tax revenue without increasing taxes.

But, Obama, in reaching out for 3 Republican Senate votes, slaughtered the chance of an effective stimulus and is now suffering the consequences of such action. The opposition is trying to break Obama, to regain power by attacking his policies and working for their failure; it is as sad as the Moveon.org people wishing for the Surge's failure a few years back. Foreclosures, inaccessible health care, failing schools, rising tuition and bogus student loans, falling demand, dying industries, uncontrolled credit card debt, and simple unrest and disarray are driving the country to its knees. Real solutions are required, and Obama is capable of delivering them and you are right - if only Obama could whip the minions and devils in Congress to act as he wishes. But, as your yearning for Enlightened Leadership minus the bickering is similar to mine, we have a democratic from of government with co-equal branches of government. Congress must also act and as co-equal they are entitled to their own opinions and choices. We cannot forget that part of the anger directed at the Bush administration is that he ignored and walked over Congress due to this fact, and often made poor decisions despite the [best of??] intentions. Obama is right in including Congress and I just hope they can get that act together before it is too late. I'd like to have something that feels like a first world country to move back too soon.

Healthcare Industry

2009-06-25T18:59:32Z

It seems that the healthcare industry is actually manipulating data and using fear tactics to stall a public option, fearing that there absurd profits will slid away against a good national healthcare system, and naturally with the full support of the Republican caucus.

Healthcare - The Public Option vs The Shareholder

2009-06-19T11:37:30Z

I was disappointed to hear the details that the latest version of the comprehensive healthcare compromise excludes a public option. A public option is a sturdy measure in controlling the cost of basic healthcare needs, which in the USA the healthcare industry has exploited for their own (significant) financial benefit.

Here in Germany, we have a successful mixture of public and private plans that compete with each other with the government only mandating what needs to be covered at a minimum, leaving the rest of the details to the public Krankenkassen and private plans to sort out on their own and the consumer the free choice to choose what he-she wants. The result is a far superior system when examining basic healthcare indices, e.g. waiting time, cost, treatment efficacy, life expectancy, infant mortality, etc.

Polling reveals that Americans want a public option available (70%), with the only protest coming from those backing the private companies, claiming "unfairness." Yet, these are the same private insurers who have been robbing the public for years with their exploding premiums. This debate does not seem to be on behalf of a government for the people and by the people, but one for the shareholder and against the people.

The CBO's fear that the droves of people would flee private insurance for a public option, an implicit acknowledgement of the public's desire for a public option, when assessing the impact of such a plan on the budget on the budget, neglects to take into account that a successful public plan would free businesses from the exorbitant yearly raises in the costs of healthcare, in turn enabling higher wages to be paid, which would provide the financing for the government program through increased tax revenue.

Investment Banking

2009-06-01T19:19:12Z

From Bloomberg:

"The investing community doesn't welcome long-term involvement by the U.S. government in the private economy," said Kevin Starke, an analyst at CRT Capital Group LLC in Stamford, Connecticut. "Every time I try to pitch an idea to investors that has some government involvement, the automatic reaction is, 'I don't want to get involved.'"

The investment community despises government involvement, except of course, when their investments are about to go bust and then when they need to provide the shares in exchange for the billions received....

Please Explain

2009-05-20T21:00:02Z

The right wing of the right wing, despite being blown out in the previous two elections, still seems to be setting the tone of the political dialogue and winning each and every confrontation. A short list of examples:

Healthcare Reform (Universal Healthcare = Fascism)
Bank Reform (Consumer Protection = Socialism)
Gitmo's Closure (Not torturing = Totalitarianism)
Barack Obama (President = Communist)

There seems to be glee in every dishonest victory, as if winning a gotcha game of political world play will solve this nation's pressing problems.

Will the Real Ponzi Please Stand Up!

2009-05-06T21:02:49Z

It appears that major banks, which packaged and sold sub-prime backed mortgage securities and orchestrated large credit default swaps on the solid rating of those said securities, were also -to the tune of more than $1 trillion- the underwriters of the sub-prime loans.

The story, as far as I understand it, is now as follows: the banks make risky loans that they packaged and sold to themselves, and on whose stability and soundness they in turn they place bets on, which somehow translates into expanding the banks assets and insuring solvency.

The bankers, so it seems, were making absurd amounts of money for shuffling paper from one desk to the next, until the wind blew and the house of cards came crashing down, and they needed the taxpayers - who were broke having just been shafted with a bunch of bad loans - to bail them out to the tune of $2 trillion.

Hmmm, somehow I feel as I am being robbed.....

Bankrupt

2009-04-29T21:12:24Z

The bankruptcy laws remodeled during the Bush years to remove much of the wording sheltering a lender from outright financial ruin, have been the target of much criticism over the past few years as ever-more people suffer from their ill effects. Returning a sense of fairness to the process intended to bridge the divide between debtor and creditor in times of financial trouble was an integral part of the Democratic platform in the 2008 election. Despite the electoral mandate the Democrats walked away with, the Banking Lobby - Washington's most effective and well funded - seems to be on the verge of successfully halting any chance of reform. With 100% Republican opposition and a few Democrats unwilling to vote for the change, the needed super-majority of 60 votes seems doubtful.

What raises my ire is the false presupposition that 60 votes are needed for all pieces of tough legislation. A majority is 51 votes. A simple threat of a potential filibuster does not qualify as a reason not to push for a vote - all a filibuster is is a tactic that can be used to stall a piece of legislation if it is successfully conducted;, i.e. talking a piece of legislation to death. It is a very public tactic and is very much subject to public perception. It was after all Jimmy Stewart's moral correctness and principle that made his position so successful in Mr. Smith Goes to Washington.

If the Republicans hold ranks against the proposed reform, the will be leading a fight against the restoration of what a vast majority of people see as a just and needed procedure. Each filibustering Senator will be standing on the side of the bailed-out banks, themselves bankrupt and in need of protection - granted by and paid for by the taxpayer - as they hail a moral imperative to fight the hazard of poor financial planning. In other words, the Republican caucus will be openly supporting the hypocrisy of Wall Street, who has taken and destroyed much of this country's wealth and now intends to rob those suffering economic hardship of their homes. A fair bankruptcy procedure allows those who did not speculate on the housing market a chance to continue living and an opportunity to rebuild and repay. It is time for Harry Reid to stand-up strong: this is the best time to dare the Radical Right to filibuster and call their bluff.

(Or, am I wrong in assuming the absurdity of the position taken - and the very public defense a filibuster would entail - would result in the electoral irrelevance of the Republican Party for many years to come?)

Why Eat Bread When There is Cake?

2009-04-26T19:23:37Z

As the world sinks into the Great Depression v.2.0, the pay of Wall Street brokers, the very ones responsible for bringing about our fantastic financial collapse, is set to rebound. Absurd!

Usury version 2.1

2009-04-22T20:28:54Z

The major American banks, having received hundreds of billions of dollars from the US taxpayer, have yet to humble itself in the face of the damage their collective hubris caused. Instead of taking at least partial responsibility for irresponsible lending practices, the major banks embarked on a lobbying campaign, gleefully supported by the moral right, placed full blame on irresponsible borrowers. Instead of reworking mortgages at the risk of defaulting, the banks chose to a journey of massive foreclosure, which in turn sowed devastation on the world economy. Now, having been bailed out, instead of showing gratitude for the generosity of the taxpayer, the banks are using their taxpayer sponsored funds to lobby against fairer credit card lending rules, e.g. forbidding the spontaneous escalation of the APR by integer multiples - and again with the support of the right. The absurdity is worthy of Camus.

Cheney's Got a Gun

2009-04-20T21:48:37Z

What is up with Dick Cheney still thinking he is the grand overlord of the USA. I have no recollection of a former President or VP acting as offensively as this most current former is. I get the impression that Fox is really pushing for a revolt of the radical Republicans and Cheney seems to be in bed with Glen Beck, Hannity and Bill-O. My question is,what do they (the extreme right) have to gain from all this agitation? Again to cite Drudge Report:

Cheney Calls for Legal Memos to be Declassified

Mon Apr 20 2009 16:20:53 ET

In a two part interview airing tonight and tomorrow night on FOX News Channel's Hannity (9-10PM ET), former Vice President Dick Cheney shared his thoughts on the CIA memos that were recently declassified and also revealed his request to the CIA to declassify additional memos that confirm the success of the Bush administration's interrogation tactics:

CHENEY:

"One of the things that I find a little bit disturbing about this recent disclosure is they put out the legal memos, the memos that the CIA got from the Office of Legal Counsel, but they didn't put out the memos that showed the success of the effort. And there are reports that show specifically what we gained as a result of this activity. They have not been declassified."

"I formally asked that they be declassified now. I haven't announced this up until now, I haven't talked about it, but I know specifically of reports that I read, that I saw that lay out what we learned through the interrogation process and what the consequences were for the country."

"And I've now formally asked the CIA to take steps to declassify those memos so we can lay them out there and the American people have a chance to see what we obtained and what we learned and how good the intelligence was, as well as to see this debate over the legal opinions."

Developing...

Right Wing Radicals

2009-04-14T17:11:13Z

The Drudge Report, often out- "fair and balance" -ing Fox News, had a headline that caught my attention just a moment ago: Homeland Security is warning of the rise of the radical right and states rights groups. The thought of a progressive push in policy seems to be polarizing and pushing the right further away from the moderate center and generating talk of "tea parties" and a new revolution. The right, in pushing for guns as the solution to gun violence, seems to agitating for a fight and raising the panic alert to 'impending doom. I never knew the idea of universal healthcare coverage and affordable college tuition would be seen as an existential threat by so many.

Are the wounds of the Civil War, which I saw as finally being healed with the election of Barack Obama, instead being reopened? Are we now in a time where Barack Obama, not only having to navigate through a economic recession-depression, a healthcare crisis, an energy crisis, etc, will also have to find a way to avoid being the second coming of James Buchanan?

Kramer vs Stewart : The Prequel

2009-03-27T22:05:58Z

Unbelievable

Krugman's Point

2009-03-27T19:42:18Z

The economic analysis of the current and continuing bailout is missing the critical point central to Paul Krugman's strong criticism. The bailout as is, the plan to repackage and resell the questionable sub-prime mortgage backed securities with is the an FDIC backing, is a stop loss mechanism to coax investors back to the table and restore a sense of normalcy but does not address the problem at hand but simply re-inflates the already burst bubble.

Krugman is warning that the solution offered, as is, is simply the continued construction on the same foundation that brought on the current episode, and that the cost, both the massive increase in the debt as a portion of GDP and increased inflation, is not worth the gain. The plan builds upon the same untruth at the heart of this crisis. It has been left unchanged and the deflationary-depressionary menace has not disappeared, instead society has simply turned its head away from doom and have delayed, yet again, dealing with chronic institutional problems.

His point is similar to that made by George Lukács. It is a call for an interpretive shift in the understanding of the capitalism system. The economy should be to the benefit of society at large not to the advantage of the few; a nation is not stomping ground of an individual but the collective work of group. Even Adam Smith realized that if the fruits of economic development were not shared, that the system was morally unsound and its stability threatened.

Akin to how FDR declared a bank holiday, Wall Street needs to take a step back from the markets. The large investment institutions need to break out of the feedback loop they are sitting in; the total loss of the ability to hear reality above the screeching of the Dow Jones Index and the S&P 500 is prolonging the damage. A glimmer of hope can be seen if the markets reach a semblance of stability and are allowed to do so devoid of gimmicks. Allowing the larger correction to manifest itself is perhaps in the short-term more painful, it will mean coming to terms with ideological failings and the large political consequences thereof, but offers the long stability required for a healthy economy. We need to return to being a society that creates real wealth.

To do so, a re-evaluation and revolution of our system is needed. Because of the lack of a social welfare network the US is pushed to act quickly. This has allowed for some missed queues, e.g. statistically insignificant events such as the AIG bonuses to escalating into populist rage, that put a larger reformation at risk. Change will involve incorporating aspects of the European social democratic welfare model, as to provide a dampening effect of future crisis and also fix flaws that this crisis has exposed, like the education, income and healthcare gaps. The conservative voices deny this need, the recession is a psychological manifestation after all, and success results from evolutionary prowess; nature is emphasized and nurture forgotten.

But, the security the EU feels as a result of its well planned and run welfare state is causing its leaders to delay action and forgo the use of political capital, which is as deadly as the partisan infighting now stalling the US democratic process. A tempered yet radical solution needs to be found. The State is mandated to foster the conditions for success of its citizens, by providing good education, solid infrastructure, and affordable healthcare. This does not imply coddling but the Founding Fathers did not intend a nation of sadists as the conservative wings seem to. If the state cannot provide a foundation for its citizens to build upon, then the promise of Life, Liberty and Happiness are left hallow.

Tarp and Feather

2009-03-27T18:46:03Z

The American meritocracy has deteriorated into a two-tiered society more akin to the feudal hierarchy of Medieval Europe than its own self-image as a land of opportunity.

The best of the brightest of the nation and more than one generation have been blinded by the temptation of greed and the loss of perspective, brainwashed by 90 hour weeks and paychecks often upwards of six digits. With hedonism unregulated guiding the financial collapse, the Nation has been brought to its knees to await the death-blow.

Standing in the background Henry Paulson and Goldman Sachs pull the strings of the greatest heist since the noble knights of the 4^th Crusade escaped Constantinople with the last treasures of Ancient Rome, redistributing the wealth of a nation to whom it deems fit, sticking the taxpayer with the bill, while letting the citizen sink into a pit of despair, out of work and ever poorer.

The banks were not asked to generate false assets transferring paper in an arbitrary manner from one pile to the next, whose success was tracked by some index bound to a nation's mood. Instead of the systematic shorting of their own country's industry, betting on failure, they were asked to facilitate the creation of generational and societal wealth with the relaxed rules and freer markets that were so desperately lobbied for.

The country has been fleeced and the thieves are demanding and receiving multi-million dollar paydays so to be retained and rewarded for the Great Robbery. The financial industry, at a minimum the administrators and executives of the collective group, should be facing a life in prison for reducing the coffers of the United States into nothing, in lieu of the luxury and expanded political influence rewarded following their financial failure.

Since the great egalitarian experiment has been destroyed and morphed into a dystopia of feudal lords and serfs, perhaps the antiquated notions of populist justice should be revived. Tar and Feather the bastards and drag them through the streets; start with Joe Cassano and Henry Paulson the architects of the damn rouse. Obama warns of governing out of anger, but I say one shouldn't be pleasant when being pissed on.