Andrew Sullivan on McGinness' Palin book

Andrew Sullivan, who for the past three years has been denouncing the sustained lies and bizarre cult of Caribou Barbie has a few key words about Sarah Palin in regards to Joe McGinness' new book on her titled "The Rogue".

it remains, in my view, deeply relevant to this country's institutions that we fully investigate and understand how a delusional, unstable, ignorant, vicious unknown came to be selected by a tiny group of people with no serious vetting to be potentially one heart beat away from the presidency of the US. The magnitude of that error should make anyone who cares about this democracy worry. Palin is different - less qualified than anyone in history, shielded from press scrutiny, able to get away with constant lies and absurd stories because of a cowed press, terrified of being called "liberal."

- The Daily Dish, "Unattributed Crap"

Stiglitz on stimulating the US economy

Joseph Stiglitz, professor of economics at Columbia University, former Senior Vice President and Chief Economist of the World Bank, and recipient of the 2001 Nobel Memorial Award in Economic Sciences, offers some sound advice to the American political system in how to stimulate the US economy.

He points out the obvious:

First, we must dispose two myths. One is that reducing the deficit will restore the economy. You don’t create jobs and growth by firing workers and cutting spending. The reason that firms with access to capital are not investing and hiring is that there is insufficient demand for their products. Weakening demand — what austerity means — only discourages investment and hiring.

He asks, "How do we  get America back to work now?"

The best way is to use this opportunity — with remarkably low long-term interest rates — to make long-term investments that America so badly needs in infrastructure, technology and education.

We should focus on investments that both yield high returns and are labor intensive. These complement private investments — they increase private returns and so simultaneously encourage the private sector.

Helping states pay for education would also quickly save thousands of jobs. It makes no sense for a rich country, which recognizes education’s importance, to be laying off teachers — especially when global competition is so fierce. Countries with a better educated labor force will do better. Moreover, education and job training are essential if we are to restructure our economy for the 21st century.

The advantage of having underinvested in the public sector for so long is that we have many high-return opportunities. The increased output in the short run and increased growth in the long run can generate more than enough tax revenues to pay the low interest on the debt. The result is that our debt will decrease, our GDP will increase and the debt to GDP ratio will improve.

He also considers the possibility of raising taxes and using that income to invest in the country to stimulate the economy.

Increasing taxes at the top, for example, and lowering taxes at the bottom will lead to more consumption spending. Increasing taxes on corporations that don’t invest in America and lowering them on those that do would encourage more investment. The multiplier — the amount GDP increases per dollar spent — for spending on foreign wars, for example, is far lower than education, so shifting money here stimulates the economy.

There are things we can do beyond the budget. The government should have some influence over the banks, particularly given the enormous debt they owe us for their rescue. Carrots and sticks can encourage more lending to small- and medium-sized businesses and to restructure more mortgages. It is inexcusable that we have done so little to help homeowners, and as long as the foreclosures continue apace, the real estate market will continue to be weak.

The banks’ anti-competitive credit card practices also essentially impose a tax on every transaction — but it is a tax with revenues that go to fill the banks’ coffers, not for any public purpose — including lowering the national debt. Stronger enforcement of antitrust laws against the banks would also be a boon to many small businesses.

Europe's inverted socialism

And most Northern Europeans also seem to believe that the bailouts have gone to lazy Southern Europeans. In fact, their purpose has been to shore up the fragile Northern European financial systems. German banks are among the weakest in Europe; some of them (especially the state-owned landesbanks) are effectively bankrupt. If they were forced to mark down their Southern European debt, they might well collapse in a heap, and the European financial system could grind to a halt. Just as in the United States, the real impact of the European bailout has been to shore up the continent’s banks – not to help the continent’s debtors. The recent downgrading of two of France’s most important banks, due to their holdings of Greek debt, reminds us of how exposed Northern Europe’s financial systems remain. And rumors of a recent IMF report that European banks are over $270 billion short of the capital they need to confront their current problems served to drive the point home.

- Jeffry Frieden, "Europe's Lehman moment"

Europe's financial problems have escalated to the point where a world-wide contagion has become again possible.  Economists and international leaders are sounding alarms that have rarely been spoken in unison, since the inception of the 2008 financial crisis.  Christine Lagarde, the managing director of the International Monetary Fund, said "We have entered into a dangerous phase of the crisis." Her words come at a point where the Greek debt crisis appears to be reaching its climax.  Moody's Investors Service downgraded two of France's top banks, Societe Generale and Credit Agricole, stating that it had concerns about the two banks funding and liquidity profiles, due to their exposure to Greek debt.  A recent analysis indicates that 43 large European banks hold debt in the PIIGS equivalent to 65% of the book value of those institutions. Gretchen Morgenson of the NY Times explains the current situation:

Some of these [European] banks are growing desperate for dollars. Fearing the worst, investors are pulling back, refusing to roll over the banks’ commercial paper, those short-term i.o.u.’s that are the lifeblood of commerce. Others are refusing to renew certificates of deposit. European banks need this money, in dollars, to extend loans to American companies and to pay their own debts.  

As a result several central banks have mounted a coordinated effort to inject US dollars into the financial system to stimulate market confidence.  The Guardian newspaper elaborates:

The Bank of England joined the US Federal Reserve, the European Central Bank, the Swiss National Bank and the Bank of Japan on Thursday to announce that they would flood money markets with dollars over the coming months.

Gus Faucher, director of macroeconomics at Moody's Analytics, states "The big question is: is this enough in the short term to get us to a longer term solution? There is a potential for a really huge financial crisis in Europe. Things are bad now, but they could get a lot worse."

Many observers are looking at the current European situation and seeing similarities between Lehman Brothers demise and the 2008 crisis.

Adding to the peril is that these banks are funded primarily by short-term investors, like buyers of commercial paper, rather than by depositors, as is more often the case with American banks. This was the same problem faced by Bear Stearns and Lehman Brothers, which collapsed after short-term lenders fled in panic.

Economist Barry Eichengreen says that, "The euro’s survival and, indeed, that of the European Union hang in the balance."  He says long term proposals on restructuring Europe's sovereign debts are not of immediate concern, rather the continent needs to act decisively in stabilizing its banks.  The European Financial Stabilty Facility (EFSF) and even the IMF should be used to re-capitalize Europe's weak banks.  The second move should be to give Greece sufficient room to maneuver by asking its creditors to relax its fiscal targets.  Third, governments need to end this futile dalliance with austerity and proceed with stimulus projects that would create real growth.  He states, "Without growth, tax revenues will remain stagnant, and the capacity to service debts will continue to erode. Social stability, similarly, depends on it."

Economist Paul Krugman at the beginning of this week had some serious words for European governments.  He states, "We’re not talking about a crisis that will unfold over a year or two; this thing could come apart in a matter of days. And if it does, the whole world will suffer"  Likewise, he is telling Europe to use the ECB to continue buying up Spanish and Italian debt to contain the risk of default. The moral argument for inaction or worst punishing Europe's peripheral nations and the Mediterranean nations of Spain and Italy, will drive the continent -if not the world- into another economic abyss.

The reality is Greece's debt problems have been growing and not diminishing over the past two years.  The country is not in any position today or in any foreseeable future to repay the totality of its debt.  Under the current regime imposed on the country, Simon Johnson a former IMF chief economist concludes that "The tax revenue needed to service [the Greek] debt would burden businesses and households for decades – enterprising and productive people will move their fortunes and their futures elsewhere in the euro area or to the United States." Throwing billions of dollars at the nation, only to prop up banks in the northern economies of Europe and hoping that the situation will be resolved at a later date, has now been shown to be an unfeasible and irresponsible position.  Europe needs to first stabilize its banking sector immediately and then proceed in an orderly default of Greece's debt. An unorderly default will plunge the entire Eurozone into chaos.  Spain and Italy will face unprecedented pressure, whereas the remaining nations of Portugal, Ireland, and Greece may well face economic collapse.

Texas sized Climate Change!

Reports from NOAA's National Climatic Data Center (NCDC) in Asheville, N.C. indicate that the heat waves encountered in the USA during the months of June, July, and August, represent the second warmest summer.

The press release indicates the following:

• Excessive heat in six states -- Arizona, Colorado, New Mexico, Texas, Oklahoma, and Louisiana -- resulted in their warmest August on record. This year ranked in the top ten warmest August for five other states: Florida (3rd), Georgia (4th), Utah (5th), Wyoming (8th), and South Carolina (9th).The Southwest and South also had their warmest August on record.
• Only nine of the lower 48 states experienced August temperatures near average, and no state had August average temperatures below average.
• An analysis of Texas statewide tree-ring records dating back to 1550 indicates that the summer 2011 drought in Texas is matched by only one summer (1789), indicating that the summer 2011 drought appears to be unusual even in the context of the multi-century tree-ring record.
• Texas had its driest summer on record, with a statewide average of 2.44 inches of rain. This is 5.29 inches below the long-term average, and 1.04 inches less than the previous driest summer in 1956. New Mexico had its second driest summer and Oklahoma its third driest summer. New Jersey and California had their wettest summers on record with 22.50 inches and 1.93 inches, respectively.
• Based on NOAA's Residential Energy Demand Temperature Index, the contiguous U.S. temperature-related energy demand was 22.3 percent above average during summer. This is the largest such value during the index's period of record, which dates to 1895.

Recession Watch: one dip, two dips,... we all fall down

The trend lines are undeniable; the US economy is heading into another recession.  Debate between economic analysts entail whether what is occurring is an entirely new recession, a double-dip recession, or the continuation of even larger economic contraction that began initially with the 2008 financial crisis (which some would argue is an extension of the 2001 recession) and has properties that are unlike previous recessions.  Each of these arguments have some validity in explaining the current situation, but all conclude that this new decline, while not likely to be as severe as the 2008 crisis, will last longer in duration and given the current political weaknesses of the major industrial nations, be more difficult to mitigate.

Leaving aside the debt crisis and economic malaise that is occurring in Europe for the moment or the possible hard landing that has been predicted about China and the entailing risks these situations pose to the global economy, America's economic position is clearly weak.

First, the jobs position is dismal.  Last month, zero jobs were added and only a fraction of the jobs necessary to compensate for population growth alone have been achieved in the previous four months.  The NY Times summarizes:

Over the last 50 years, every time that job growth has been as meager as it has been over the last four months, the economy has been headed toward recession, in a recession or in the immediate aftermath of one.

The collapse of job creation is not about businesses fearing regulatory uncertainty, creeping hyper-inflation, or the need for further tax-cuts to stimulate big businesses already bloated corporate coffers, but rather it is due to insufficient aggregate demand.  People without jobs, people forced to take inferior paying jobs, people concerned that they may lose their jobs, people forced to subsidize their spouse, adult children, parents, and/or relatives, and people loaded with debt, aren't engaged in making major purchases, because they can't afford to.  Consider the following:

But the latest indicators suggest that even if the economy does not continue to worsen, it appears to be too weak to add enough jobs each month — roughly 125,000 — even to keep pace with population growth. Anything less, and the share of the population that is employed will continue to fall.

The stimulus program offered by Mr. Obama was insufficient to meet the full demands of the  financial crash of 2008.  This blog has been saying for the past three years (here, here, and here) that the weak recovery was an illusion.  Joseph Stiglitz said back in 2009 that, "We need a larger and better designed stimulus."  Paul Krugman has been waging a public policy crusade to convince the public that a second more robust stimulus is needed.  President Obama, instead of listening to these and similar minded economists, decided to split the difference and offer everyone a little of what they wanted: a little bit of tax cuts and some stimulus over a couple years.  The problem was that while averting a more severe recession, it failed to create enough power to re-inflate the economy to pre-recessionary levels.  Now that the stimulus dollars have been used, the economy is drifting back into negative territory and with a recalcitrant Republican dominated House of Representatives, there is virtually no chance that anything of substance being passed.

Other indicators such as GDP, consumer confidence, consumer consumption, factory employment diffusion index, and housing are all trending downwards.  Volatility in the market place, with abundant talk of debt crises across the western hemisphere, has investors and business worried.  Last month Asian banks cut credit lines to French banks.  Central banks across Europe, Japan, and America have made the unexpected move to offer dollars to European banks to ensure liquidity.

What had been in 2008 a financial crisis has migrated into a sovereign debt crisis.  Nouriel Roubini expands:

We are running out of policy bullets. The policymakers don't have monetary bullets; they don't have fiscal bullets; they cannot even backstop their own financial system. That's why it's more scary than a year ago, two years ago, or three years ago -- when we had all these policy bullets. Now we are running out of them.

***

Ken Rogoff, Harvard professor and former chief economist at the IMF, has said, "the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation."  As a result, Rogoff points out that many policy makers have badly misunderstood the overall problems associated with this second great contraction, as he puts it.  He offers the suggestion that, "If governments that retain strong credit ratings are to spend scarce resources effectively, the most effective approach is to catalyze debt workouts and reductions."

Solutions to both individual and national debt problems should be addressed as follows:

For example, governments could facilitate the write-down of mortgages in exchange for a share of any future home-price appreciation. An analogous approach can be done for countries.  For example, rich countries’ voters in Europe could perhaps be persuaded to engage in a much larger bailout for Greece (one that is actually big enough to work), in exchange for higher payments in ten to fifteen years if Greek growth outperforms.

Another approach offered by Rogoff to reduce the painful deleveraging process and years of unnecessary slow growth, would be for central banks to pursue a policy of moderate inflation of 4-6% for several years.

At this stage, none of the policies suggested by Stiglitz, Krugman, Roubini, or Rogoff appear on the table in either Washington DC or the capitals of Europe.  Instead of sustained and ambitious solutions, we are left with blathering idiots telling us of austerity programs that will magically generate confidence, while keeping away the terrible bond vigilantes.  The incompetence and stupidity of our leaders is nearly blinding.

Quote of the day: Tom Ricks on Fox News

I think Fox may be the most destructive force in American society nowadays, basically pouring poison into the stream of our political discourse.

- Tom Ricks, "Fox News Scoop!"

As this blog has been discussing for years, the function of the media is not to inform, but to deform reality for the benefit of the ruling class.  In this context, the nature of the news is by definition propaganda and its value, just as Pravda was during the years of the Soviet Union, is to leave the audience with a specific perspective that benefits the powerful.  In the USSR it was the communist party; in the USA it is the broad swath of business interests, including the military-industrial-surveillance complex, big-pharma, big-agri, the financial industry, the energy/chemicals sector, and Health care/insurance industry.  Fox News serves the interests of these people and is, as Ricks points out, a source of outright fraud that contaminates civil discourse with purposefully designed falsehoods and innuendo that plays into the biases and bigotry of their audience.

I found it interesting when Dick Cheney was vice-president, that he wanted the television in his hotel suites preset to Fox news.  Did that mean that he wanted to know what the minions were watching and thus assess the adequacy of his disinformation machine personally?  Or did it mean that Cheney was uninterested in hearing other perspectives of news, other than the one he and his cohorts had created?  Fox News represents the convoluted intersection of corporatism and government sponsored deceit.  This disinformation channel, because it wasn't interested in news but in pushing perspective, became a juggernaut in the decade of the zeroes. The conventional framework of left and right politics has broken down.  As a result, no longer is the prevalent conflict between liberals and conservatives.  Instead, the struggle for America has become a battle between an inverted form of totalitarianism, defined by corporatism, and the free flow of information espoused by those interested in democracy.

There are those who feel that if a person is given sufficient and credible information, they will invariably choose the most rational argument.  The fact that religion, debunked political ideologies, and failed economic models persist amongst the majority of Americans, suggests that this line of thinking is false.  Many people don't want to know the truth.  They want to be lied to and given ridiculous and fictitious narratives that make their lives tolerable.  The majority of the world want to exist under what Nietzsche described as a slave ethic.  A world where they are the constant victims, where forces external to themselves are always punishing them and depriving them of their just deserves.  In the minds of American conservatives, Fox News is their secular conduit to the outside world.  They can justify their ignorance and prejudices through presented falsehoods and manufactured realities, while all the time marching to the beat of their corporate masters.

Posts from the moral center of hell

Over the past few days a number of commentators have expressed awe at the indecency and depravity of the Republican party and its core constituents in applauding the notion that the state has no obligation to ensure the well being of it citizenry in the event of unforeseen medical catastrophe.

During a televised debate between candidates for the Republican Party presidential nominee, CNN host Wolf Blitzer asked Rep. Ron Paul (R-TX), given that he was a practicing medical doctor, as to what obligation does the state have to an individual who chooses not to pay for medical insurance but falls ill. Ron initially evaded the question and gave the standard "right to choose" and "liberty" blather that economic libertarians like to preach. When Blitzer pressed on and asked if the man should be left to die, the crowd erupted in "Yeah!"

This is the party that always calls itself moral and Christian. This the party that goes around the nation demanding an end to abortion. Ron Paul himself has claimed that abortion is nothing less than murder. This is the same party that rammed through congress a bill that would have stripped Terri Schiavo's husband from deciding on her welfare, given her vegetative and unconscious existence, and making her a ward of the state. This is the same party that was shrieking over the evils of Obamacare and the horrors of death panels and socialized medicine, in the run up to the 2010 congressional midterm elections. Yet when faced with the opportunity to show some decency and Christian charity, they reverted to their true character.

Republicans aren't just an amoral political force. They are a dangerous cancer on humanity. Their war-mongering, anti-intellectual, anti-environmental, and hyper-religiosity founded on evangelical bigotry of all persons who do not share their immediate goals, has been shown to be lethal to those of us not living in Dixie.

US Poverty Rate at 15-year high

Rotting from the inside out, is how I'd best describe the current circumstances.

The US census bureau came out this week with some further data that shows that the decade of the zeroes was a bust for most people.  The NY Times summarizes:

With the country in its worst economic crisis since the Great Depression, four million additional Americans found themselves in poverty in 2009, with the total reaching 44 million, or one in seven residents. Millions more were surviving only because of expanded unemployment insurance and other assistance.

Professor Lawrence Katz, an economics professor at Harvard, states in this second article, “This is truly a lost decade... We think of America as a place where every generation is doing better, but we’re looking at a period when the median family is in worse shape than it was in the late 1990s."

Everyone was quite happy when they were making a bit more and the music played on; even if the top 1% were making multiples at the time.  Now the day of reckoning has arrived and people are awakening to the real morning in America.  Less opportunities, less income, more social inequality, a middle class in decline, and a federal government that is completely owned and bought for and by corporate interests.  This is the rancid fruit of thirty years of Reaganomics.

The specific details provided by the article, show that the nation is in decline.

• Last year, about 48 million people ages 18 to 64 did not work even one week out of the year, up from 45 million in 2009, said Trudi Renwick, a Census official. 
• According to the Census figures, the median annual income for a male full-time, year-round worker in 2010 — $47,715 — was virtually unchanged, in 2010 dollars, from its level in 1973, when it was $49,065, said Sheldon Danziger, professor of public policy at the University of Michigan. 
• The period from 2001 to 2007 was the first recovery on record where the level of poverty was deeper, and median income of working-age people was lower, at the end than at the beginning.
• 22 percent of children are in poverty, the highest percentage since 1993. 
• For a single adult in 2009, the poverty line was $10,830 in pretax cash income; for a family of four, $22,050. 

Given that the Great recession will continue for years, perhaps even throughout this current decade, poverty rates will increase, social unrest will occur, and political mayhem may well ensue in the years to come, unless serious and coordinated changes are made.

Sarah Palin sacrificing herself for interracial harmony!

Could I have been wrong all these years, that Caribou Barbie (aka Sarah Palin) is actual not a racist and loves (really loves!) other people and races?

News reports based on the yet unreleased book by Joe McGinniss titled "The Rogue: Searching for the Real Sarah Palin" claims that Palin has a fetish for black men, has used illicit drugs, and has had marital affairs.  It has been suggested by Caribou Barbie that Mr. McGinniss, -who was invited to live in Sarah Palin's neighbor's house and observe the Palin family- is a pervert and maybe even a pedophile!  As everyone knows, Sarah doesn't pull punches when this hockey mom with lipstick gets angry.

Sludge like this is better left in the pages of tabloid newspapers, preferably owned by arch-douche bag Rupert Murdoch.  There are probably far more damaging and news worthy stories about Palin, which has been richly covered elsewhere.  However, my contempt of Palin and the entire faux-populists and deranged crypto-fascists of the Tea Party movement demand me to at least bring to light these allegations.

McGinniss has some choice words about Palin that have raised my eyebrows:

• He describes in the book "that Palin had a sexual ‘fetish’ for black men and had a one-night stand with Miami Heat player Glen Rice while dating future husband Todd Palin. Rice is said to have confirmed the encounter to the McGinniss."
• States that Palin "married her husband only after being impregnated, saying that her first child, Track, was born eight months after the wedding."
• Palin engaging with Brad Hanson, her husband’s one time business partner, in a six-month affair that lead to the dissolution of the two men's snowmobile dealership.
• Palin furthermore has in the past used marijuana and cocaine

Some of these things are pretty lame, while others are just typical low class shenanigans.  The whole black men fetish I find amusing.  It's awfully cold up there in Alaska and a piping hot thick drink of black goodness is maybe what she really needs.

***

Really though, I think more attention should be given to a documentary that is currently being shown at the Toronto International Film Festival, called "Sarah Palin - You Betcha."  The documentary, profiled in the Guardian newspaper, is by British film maker Nick Broomfield, who says that Palin "represents the forbidden in a weird and mischievous way" to the minds of evangelical Christian men in the Republican party.  People who are most knowledgeable of her, describe Palin as "dangerous", a "sociopath" and "disrespectful to intelligence".

The Guardian article summarizes Palin in a more coherent manner:

[Broomfield] has her down as a political opportunist who'll simply try to fill any power vacuum – a theory that fits neatly with the portraits offered of her as an overgrown prom queen, a beauty pageant back-stabber (there's some great footage of her puffing on a flute during Miss Alaska 1984, a dead spit for Rula Lenska) who thrives on gossip and vendettas and formulates policy with populist short-sight. Any allegiance to intellectual or fiscal ideologies is flaky at best. Her erratic decision-making meant she left Wasilla with a £22m deficit after her stint as mayor, then, as state governor, slapped an enormous tax on oil companies in Alaska. "She got that through with Democrat support," says Broomfield. "Most of the Republican party were against it."

The dangerous stupidity of this woman and her equally imbecilic followers should not be underestimated.

Krawcheck Down at BofA

I'm not a finance specialist, so I didn't know who Sallie Krawcheck was until today.  According to her online resume, she has had a fairly storied career given that she is only 46.  Until this week she held the position of Chief Executive Officer at Merrill Lynch.  Previously, she was formerly CFO at CitiCorp and Chairman and CEO of Citi's Global Wealth Management.

In an article on her and BofA in the NY Times Dealbook, it states that Ms. Krawcheck distinguished herself early in her career

as a stock analyst, covering securities companies. Early on, she made headlines with some of her bold calls, notably upsetting Wall Street executive Sanford I. Weill when she criticized the acquisition of Salomon by his firm the Travelers Group. Shortly after Alliance Capital Management purchased Bernstein in 2000, she was named chairman and chief executive.

My first thought, was how does someone at that age usurp so many people within the dog-eat-dog world of  finance to achieve so many senior positions at such an early age?  What happened to all the people who were in their 50's and 60's at the time she received her postings, who had been working in the industry before her?  The situation leads me to ask, what is it that these people are doing that is so valuable in these executive suites?  According to published articles on her, she was profiled in Fortune magazine titled, "Looking for the last honest analyst."  Krawcheck was brought into Citigroup in 2002 when its former chief Sandy Weill wanted to clean up the reputation of its tarnished Salomon Smith Barney division.  As Citigroup's CFO she used to work just down the hall from the company's former CEO Charles Prince, who was forced to resign his position at the end of 2007 as the credit crisis from the housing market emerged.  In an article in Fortune magazine in 2006, a year prior to the start of the Great Recession, she said, "The consumer doesn't seem stretched. I wouldn't bet against U.S. consumers. They're pretty rational folks."  That statement as we know today, four years into the Great Recession, is just rubbish.

Maybe this line of thought isn't germane to the actual point of  this post, but the personality based politics of  these financial firms strikes me as odd.

The point of this post is that Bank of America after hiring Krawcheck just two years ago has decided to terminate her.  Zerohedge blogger is calling her the first sacrificial lamb to be used by Bank of America in its attempt to re-organize its top management.  Consider this section of the NY Times article on the restructuring:

Since her arrival, the wealth management group has posted steady results, even as the broader market has been battered by billions of dollars in losses. In the second quarter, the division earned $506 million, down slightly from the previous period, but up from $329 million in the second quarter of 2010.
In particular, the Merrill Lynch brokerage force has been a surprising bright spot for the troubled bank, increasing its client base since the 2009 takeover by Bank of America.

Does firing the the head of one of the few divisions that does make money for the organization make sense to you?  I suppose it does if one assumes that Merrill's wealth management division no longer operates for the primary benefit of its clients, but for the shareholders of Bank of America instead.  Felix Salmon thinks:

that wealth management at BofA, then, is going to act a bit like dialup revenues at AOL: a steady and dependable revenue stream, in long-term secular decline, which can be used to fund investments in the rest of the business.

Whatever is going on at BofA suggests that this overstuffed Frankenstein operation is heading for even more serious problems than is currently being discussed publicly.  More than just management changes need to be imposed on this To-big-to-fail loser.  The entire beast needs to be cut up and sanitized for the good of the global economy.

Quote of the day: Taibbi on Obama

Listening to Obama talk about jobs and shared prosperity yesterday reminded me that we are back in campaign mode and Barack Obama has started doing again what he does best – play the part of a progressive. He's good at it. It sounds like he has a natural affinity for union workers and ordinary people when he makes these speeches. But his policies are crafted by representatives of corporate/financial America, who happen to entirely make up his inner circle.

I just don't believe this guy anymore, and it's become almost painful to listen to him.

- Matt Taibbi, "Obama and Jobs: Why I Don't Believe Him Anymore."

The political left which vaulted Mr. Obama into the White House has all but given up on him delivering anything remotely resembling his promises as a candidate in 2007 and 2008.  The standard argument by centrists and those still on the Democratic party kool-aid, is that he has delivered substantial results and has been hamstrung by Republican opposition in going further.  I find this argument absurd.  

A firestorm was unleashed amongst the political left when Prof. Drew Westen in an NY Times Op-ed, described Obama's failure to articulate a cogent and realistic picture of the political landscape in the dreary days of January 2009 and ask Americans for collective sacrifice. This is a man who was voted by a majority of Americans to turn the country around after eight horrible years under the Bush administration. He was a given an unequivocal mandate to enact liberal and far-reaching changes.  None of that has happened.   Instead we have seen a massive capitulation to business interests, the expansion of the Afghan war, and a constant rejection of liberal stances and policies in favour of Republican talking points, which include low-taxes, reduced regulations, slashing government jobs, and anti-growth austerity economics. Mr. Obama was willing only a month ago to increase the age of retirement and slash Medicare benefits for the elderly to appease the Republicans in the debt-ceiling debate.

The only reason much of the Democratic base hasn't completely abandoned him, is that the Republican label is so toxic and filled with so many morons, racists, homophobes, crony-capitalists, and religious nutters, that it is impossible not to prefer him over his opponents.

***
Further posts expanding and justifying my thoughts on Mr. Obama's tepidness are included below:

• My open letter to Mr. Obama last year is here
• Robert Reich's comment on Mr. Obama as a centrist leaning politician is here
• A critique of Mr. Obama's support for the Bush Administration's torture program (here and here).
• Daniel Elisberg, noted whistle blower and source of the Pentagon Papers, condemns Mr. Obama's pro-corporatist agenda here.
• Eliot Spitzer on Obama's first year is here
• Ralph Nader on Obama's early failures and capitulations (here, here, and here)

A decade of hell and the fall of America

The above chart (h/t Economist's View, "How long will it take for the economy to recover?") issued by the CBO describes what should be the central discussion amongst Americans.

While the developed world was on summer vacation, the economies of Europe and America have begun to decline in an alarming fashion.  Europe is scrambling to stabilize its weak perpherial economies. The march of the PIIGS has expanded to the point where Spain and Italy are no longer just question marks.  European banks are seeing formidable potential losses arise from sovereign debt issues.  Credit is tightening up and these same European banks are looking to national governments and the EU for assistance. Indecision amongst Europe's prominent leaders and a growing populist revolt across the continent have contributed to growing unease in the markets. The breakup of the entire European economic union and the failure of the Euro currency is now seriously being considered.

In America, zero jobs were added to the economy last month. Growth for the second quarter (Q2-2011) was revised to 1% (annualized).  Financial institutions like Bank of America are in trouble and Warren Buffett has again been brought, as the non-governmental creditor of last resort, to prop up the ailing bank. The Republicans have inflicted serious damage to the American economy, in their traitorous advancement of no-taxes and no-growth governance.   Obama is floundering in his dismal attempt to appease his corporate backers, while carving out a middle path for his own election.

The above chart should make you terrified.  Although the rose-colored glasses of 3.5% annual growth is being portrayed, it is the green line with 2.5% growth that is most alarming.  The difference of 1% means that America effectively will lumber along for the next decade with little to no growth, unemployment will remain obscenely high, structural unemployment and a permanent underclass will arise, the deleveraging process will take longer, and governments will be unable to adequetely deal with further social or economic problems effectively.  This is the best case scenario we are working with at the moment, taking into account the data and Rogoff and Reinhart's post-crisis modelling.

Now consider that the world heads into a protracted recession, with China crashing shortly afterwards -taking those countries like Canada and Australia that have been dependent on commodity exports with it- and you've got a recipe for global armageddon.  The world stops growing and economies across the planet try to dig themselves out of this hole.  Here too the data suggests as in the case of the Asian and Latin American crises, that a ten year window will be required to get back any reasonable trendline.  The implication is an entire generation of workers see reduced income, mounting debt, and insufficient job opportunities.  How are these countries going to pay for the benefits sold to the baby-boomer generation, when the children of the boomers are unable to find long-term jobs and thus fund those liabilities?

We have come to the end of the line.  All the major economies of the world are now posed to fall and in that cataclysmic descent, we shall venture hopelessly through a decade of stagnation, decline, and possible collapse.