Friday, September 30, 2011

Sylvia Robinson, Pioneering Producer of Hip-Hop, Is Dead at 75

Sylvia Robinson, Pioneering Producer of Hip-Hop, Is Dead at 75

Sylvia Robinson, a singer, songwriter and record producer who formed the pioneering hip-hop group Sugarhill Gang and made the first commercially successful rap recording with them, died on Thursday in Edison, N.J. She was 75.

She had been in a coma at the New Jersey Institute of Neuroscience and died there of congestive heart failure, a family spokeswoman said. Ms. Robinson lived in Englewood, N.J.

Ms. Robinson had a successful career as a rhythm and blues singer long before she and her husband, Joe Robinson, formed Sugar Hill Records in the 1970s and went on to serve as the midwives for a musical genre that came to dominate pop music.

She sang with Mickey Baker as part of the duo Mickey & Sylvia in the 1950s and had several hits, including “Love Is Strange,” a No. 1 R&B song in 1957. She also had a solo hit, under the name Sylvia, in the spring of 1973 with her sultry and sexually charged song “Pillow Talk.”

In the late 1960s, Ms. Robinson became one of the few women to produce records in any genre when she and her husband founded All Platinum Records. She played an important role in the career of The Moments, producing their 1970 hit single “Love on a Two-Way Street.”

But she achieved her greatest renown for her decision in 1979 to record the nascent art form known as rapping, which had developed at clubs and dance parties in New York City in the 1970s. She was the mastermind behind the Sugarhill Gang’s “Rapper’s Delight,” the first hip-hop single to become a commercial hit. Some called her “the mother of hip-hop.”

“Back in the days when you couldn’t find females behind the mixing board, Sylvia was there,” said Dan Charnas, the author of “The Big Payback: The History of the Business of Hip-Hop” (2010). “It was Sylvia’s genius that made ‘Rapper’s Delight’ a hit.”

At the time, the label the Robinsons had founded was awash in lawsuits and losing money. Facing financial ruin, Ms. Robinson got an inspiration when she heard Lovebug Starski rapping over the instrumental breaks in disco songs at the Harlem World nightclub.

“She saw where a D.J. was talking and the crowd was responding to what he was saying, and this was the first time she ever saw this before,” her son, Joey Robinson, recalled in a 2000 interview with NPR. “And she said, ‘Joey, wouldn’t this be a great idea to make a rap record?’ ”

Using Joey Robinson as a talent scout, she found three young, unknown rappers in Englewood — Big Bank Hank, Wonder Mike and Master Gee — and persuaded them to record improvised rhymes as the Sugarhill Gang (sometimes rendered as Sugar Hill Gang) over a nearly 15-minute rhythm track adapted from Chic’s “Good Times.”

The song was “Rapper’s Delight,” and the Robinsons chartered a new label, Sugar Hill Records, to produce it. It sold more than 8 million copies, reached No. 4 on the R&B charts and No. 36 on Billboard’s Hot 100, opening the gates for other hip-hop artists.

Ms. Robinson later signed Grandmaster Flash and the Furious Five, and in 1982 she was a producer of their seminal song, “The Message.” It was groundbreaking rap about ghetto life that became one of the most powerful social commentaries of its time, laying the groundwork for the gangsta rap of the late 1980s.

Born Sylvia Vanderpool in New York City in 1936, Ms. Robinson made her recording debut at 14 singing blues with the trumpet player Hot Lips Page on Columbia Records while she was still a student at Washington Irving High School in lower Manhattan. She went on to make several other blues recordings for the label, including “Chocolate Candy Blues,” before joining forces with Mr. Baker in 1956.

After several hits, Mickey & Sylvia broke up in 1962 when Mr. Baker moved to Paris. Two years later, Ms. Robinson married Joseph Robinson, a musician, and settled in Englewood, where the couple opened an eight-track recording studio, Soul Sound, and established the All Platinum label.

Ms. Robinson’s survivors include her sons Joey, Leland and Rhondo and 10 grandchildren. Mr. Robinson died of cancer in 2000.


American First National Bank, Houston, Texas, Assumes All of the Deposits of First International Bank, Plano, Texas

September 30, 2011
Media Contact:
LaJuan Williams-Young
(202) 898-3876

First International Bank, Plano, Texas, was closed today by the Texas Department of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with American First National Bank, Houston, Texas, to assume all of the deposits of First International Bank.

The seven branches of First International Bank will reopen during normal business hours beginning Saturday as branches of American First National Bank. Depositors of First International Bank will automatically become depositors of American First National Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of First International Bank should continue to use their existing branch until they receive notice from American First National Bank that it has completed systems changes to allow other American First National Bank branches to process their accounts as well.

This evening and over the weekend, depositors of First International Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of June 30, 2011, First International Bank had approximately $239.9 million in total assets and $208.8 million in total deposits. In addition to assuming all of the deposits of the failed bank, American First National Bank agreed to purchase essentially all of the assets.

Customers with questions about today's transaction should call the FDIC toll-free at 1-800-450-5143. The phone number will be operational this evening until 11:00 p.m., Central Daylight Time (CDT); on Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties also can visit the FDIC's Web site at

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $53.8 million. Compared to other alternatives, American First National Bank's acquisition was the least costly resolution for the FDIC's DIF. First International Bank is the 74th FDIC-insured institution to fail in the nation this year, and the first in Texas. The last FDIC-insured institution closed in the state was The LaCoste National Bank, LaCoste, on February 19, 2010.

Phony Fear Factor

This from Paul Krugman in the N.Y. Times. Please follow link to original.

Phony Fear Factor

The good news: After spending a year and a half talking about deficits, deficits, deficits when we should have been talking about jobs, job, jobs we’re finally back to discussing the right issue.

The bad news: Republicans, aided and abetted by many conservative policy intellectuals, are fixated on a view about what’s blocking job creation that fits their prejudices and serves the interests of their wealthy backers, but bears no relationship to reality.

Listen to just about any speech by a Republican presidential hopeful, and you’ll hear assertions that the Obama administration is responsible for weak job growth. How so? The answer, repeated again and again, is that businesses are afraid to expand and create jobs because they fear costly regulations and higher taxes. Nor are politicians the only people saying this. Conservative economists repeat the claim in op-ed articles, and Federal Reserve officials repeat it to justify their opposition to even modest efforts to aid the economy.

The first thing you need to know, then, is that there’s no evidence supporting this claim and a lot of evidence showing that it’s false.

The starting point for many claims that antibusiness policies are hurting the economy is the assertion that the sluggishness of the economy’s recovery from recession is unprecedented. But, as a new paper by Lawrence Mishel of the Economic Policy Institute documents at length, this is just not true. Extended periods of “jobless recovery” after recessions have been the rule for the past two decades. Indeed, private-sector job growth since the 2007-2009 recession has been better than it was after the 2001 recession.

We might add that major financial crises are almost always followed by a period of slow growth, and U.S. experience is more or less what you should have expected given the severity of the 2008 shock.

Still, isn’t there something odd about the fact that businesses are making large profits and sitting on a lot of cash but aren’t spending that cash to expand capacity and employment? No.

After all, why should businesses expand when they’re not using the capacity they already have? The bursting of the housing bubble and the overhang of household debt have left consumer spending depressed and many businesses with more capacity than they need and no reason to add more. Business investment always responds strongly to the state of the economy, and given how weak our economy remains you shouldn’t be surprised if investment remains low. If anything, business spending has been stronger than one might have predicted given slow growth and high unemployment.

But aren’t business people complaining about the burden of taxes and regulations? Yes, but no more than usual. Mr. Mishel points out that the National Federation of Independent Business has been surveying small businesses for almost 40 years, asking them to name their most important problem. Taxes and regulations always rank high on the list, but what stands out now is a surge in the number of businesses citing poor sales — which strongly suggests that lack of demand, not fear of government, is holding business back.

So Republican assertions about what ails the economy are pure fantasy, at odds with all the evidence. Should we be surprised?

At one level, of course not. Politicians who always cater to wealthy business interests say that economic recovery requires catering to wealthy business interests. Who could have imagined it?

Yet it seems to me that there is something different about the current state of economic discussion. Political parties have often coalesced around dubious economic ideas — remember the Laffer curve? — but I can’t think of a time when a party’s economic doctrine has been so completely divorced from reality. And I’m also struck by the extent to which Republican-leaning economists — who have to know better — have been willing to lend their credibility to the party’s official delusions.

Partly, no doubt, this reflects the party’s broader slide into its own insular intellectual universe. Large segments of the G.O.P. reject climate science and even the theory of evolution, so why expect evidence to matter for the party’s economic views?

And it also, of course, reflects the political need of the right to make everything bad in America President Obama’s fault. Never mind the fact that the housing bubble, the debt explosion and the financial crisis took place on the watch of a conservative, free-market-praising president; it’s that Democrat in the White House now who gets the blame.

But good politics can be very bad policy. The truth is that we’re in this mess because we had too little regulation, not too much. And now one of our two major parties is determined to double down on the mistakes that caused the disaster

A little bit of news for all those "Conservative" Republicans

The Moral Question

This from Robert Reich. Please follow link to original

The Moral Question

Thursday, September 29, 2011

We dodged another shut-down bullet, but only until November 18. That’s when the next temporary bill to keep the government going runs out. House Republicans want more budget cuts as their price for another stopgap spending bill.

Among other items, Republicans are demanding major cuts in a nutrition program for low-income women and children. The appropriation bill the House passed June 16 would deny benefits to more than 700,000 eligible low-income women and young children next year.

What kind of country are we living in?

More than one in three families with young children is now living in poverty (37 percent, to be exact) according to a recent analysis of Census data by Northeastern University’s Center for Labor Market Studies. That’s the highest percent on record. The Agriculture Department says nearly one in four young children (23.6) lives in a family that had difficulty affording sufficient food at some point last year.

We’re in the worst economy since the Great Depression – with lower-income families and kids bearing the worst of it – and what are Republicans doing? Cutting programs Americans desperately need to get through it.

Medicaid is also under assault. Congressional Republicans want to reduce the federal contribution to Medicaid by $771 billion over next decade and shift more costs to states and low-income Americans.

It gets worse. Most federal programs to help children and lower-income families are in the so-called “non-defense discretionary” category of the federal budget. The congressional super-committee charged with coming up with $1.5 trillion of cuts eight weeks from now will almost certainly take a big whack at this category because it’s the easiest to cut. Unlike entitlements, these programs depend on yearly appropriations.

Even if the super-committee doesn’t agree (or even if they do, and Congress doesn’t approve of their proposal) an automatic trigger will make huge cuts in domestic discretionary spending.

It gets even worse. Drastic cuts are already underway at the state and local levels. Since the fiscal year began in July, states no longer receive about $150 billion in federal stimulus money — money that was used to fill gaps in state budgets over the last two years.

The result is a downward cascade of budget cuts – from the federal government to state governments and then to local governments – that are hurting most Americans but kids and lower-income families in particular.

So far this year, 23 states have reduced education spending. According to a survey of city finance officers released Tuesday by the National League of Cities, half of all American cities face cuts in state aid for education.

As housing values plummet, local property tax receipts are down. That means even less money for schools and local family services. So kids are getting larger class sizes, reduced school hours, shorter school weeks, cuts in pre-Kindergarten programs (Texas has eliminated pre-Kindergarten for 100,000 children), even charges for textbooks and extra-curricular activities.

Meanwhile the size of America’s school-age population keeps growing notwithstanding. Between now and 2015, an additional 2 million kids are expected to show up in our schools.

Local family services are being cut or terminated. Tens of thousands of social workers have been laid off. Cities and counties are reducing or eliminating their contributions to Head Start, which provides early childhood education to the children of low-income parents.

All this would be bad enough if the economy were functioning normally. For these cuts to happen now is morally indefensible.

Yet Republicans won’t consider increasing taxes on the rich to pay for what’s needed – even though the wealthiest members of our society are richer than ever, taking home a bigger slice of total income and wealth than in seventy-five years, and paying the lowest tax rates in three decades.

The President’s modest proposals to raise taxes on the rich – limiting their tax deductions, ending the Bush tax cut for incomes over $250,000, and making sure the rich pay at the same rate as average Americans – don’t come close to paying for what American families need.

Marginal tax rates should be raised at the top, and more tax brackets should be added for incomes over $500,000, over $1,500,000, over $5 million. The capital gains tax should be as high as that on ordinary income.

Wealth over $7.2 million should be subject to a 2 percent surtax. After all, the top one half of 1 percent now owns over 28 percent of the nation’s total wealth. Such a tax on them would yield $70 billion a year. According to an analysis by Yale’s Bruce Ackerman and Anne Alstott, that would generate at least half of $1.5 trillion deficit-reduction target over ten years set for the supercommittee.

Another way to raise money would be through a tiny tax (one-half of one percent) tax on financial transactions. This would generate $200 billion a year, and hardly disturb Wall Street’s casino at all. (The European Commission is about to unveil such a tax there.)

All this can be done, but only if Americans understand what’s really at stake here.

When Republicans recently charged the President with promoting “class warfare,” he answered it was “just math.” But it’s more than math. It’s a matter of morality.

Republicans have posed the deepest moral question of any society: whether we’re all in it together. Their answer is we’re not.

President Obama should proclaim, loudly and clearly, we are.

Some Friday Happy News

This from "Some Assembly Required" -- please follow link and visit this website.

Annual Checkup: Health insurance went up 9% last year. A family of four now pays $15,073 a year for insurance that pays only some of the costs of being sick. Try that on WalMart minimum wage. Explain to me again why we don't have, don't want, single payer national healthcare.

A More Perfect Union: A plethora of financial commentators are finally catching on to the fact that Europe's problem is not debt or fiscal irresponsibility, or even those lazy Greeks, Portuguese, Irish, Spanish, Italians... The problem is the trade balances, or rather the trade imbalances among the member nations. If a nation runs a negative trade balance (negative current account) it must borrow the difference in order to pay the bills. If the Eurozone was one big happy fiscal nation, like these United States, then the 'states' wouldn't have this problem. Sure, the US runs a deficit with the world at large, but nobody gets excited that Pennsylvania has an imbalance with Iowa. Either they gotta fuse, or dismember the euro.

Some Experience Required: The quickest way to change your mind about austerity programs is to suffer one.

Face It: Facebook has “inadvertently” been keeping track of every webpage you visit – even if you have logged out of Facebook itself. Imagine, tracking every webiste visited by its 750 million customers, every day. Imagine, if you possibly can, that it was done “inadvertently”.

Women and Children First: The order in which your city is likely to cut things in order to balance the budget without any of those horrid increased taxes is: Fire/lay off the people who provide the services. Cancel infrastructure repairs and improvements. Close the parks, pools, libraries, animal shelters, rec centers. Collect the garbage less often. “Modify” the health care benefits of city employees. Reduce public safety spending, close fire stations, cut police patrols. “Modify” pension benefits. Cut public health services. Cut spending on schools.

Bullies: Texas oil refineries want Texas school districts to pay for the pollution-control equipment the refiners are required to install. They claim they cannot afford to stop polluting the environment unless they get huge tax refunds. Win or lose, little Johnny should get an education.


This from Dr. Krugman's blog. Please follow link to original


Martin Wolf is getting frantic, as well he should. The austerians have brought us to the brink of a vast disaster. A recession in Europe looks more likely than not; and the question for the United States is not whether a lost decade is possible, but whether there is any plausible way to avoid one.

Wolf directs us to a recent speech by Adam Posen (pdf), which opens with a passage that very much mirrors my own thoughts:

Both the UK and the global economy are facing a familiar foe at present: policy defeatism. Throughout modern economic history, whether in Western Europe in the 1920s, in the US and elsewhere in the 1930s, or in Japan in the 1990s, every major financial crisis-driven downturn has been followed by premature abandonment—if not reversal—of the macroeconomic stimulus policies that are necessary to sustained recovery. Every time, this was due to unduly influential voices claiming some combination of the destructiveness of further policy stimulus, the ineffectiveness of further policy stimulus, or the political corruption from further policy stimulus. Every time those voices were wrong on each and every count. Those voices are being heard again today, much too loudly. It is the duty of economic policymakers including central bankers to rebut these false claims head on. It is even more important that we do the right thing for the economy rather than be slowed, confused, or intimidated by such false claims.

Indeed. Posen’s “unduly influential voices” are my Very Serious People. And it has been an awesome spectacle watching the VSPs search, obsessively, for reasons not to fight mass unemployment. Fiscal policy must tighten to appease the invisible bond vigilantes and please the confidence fairy. Interest rates must rise because, well, um, inflation, well, no, low rates cause moral hazard — yes, that must be it.

And we’re not (just) talking about ignorant politicians. This stuff has been coming from the European Central Bank, the Organization for Economic Cooperation and Development, the Bank for International Settlements.

I don’t fully understand it. But a large part of it, it seems obvious, is the intense desire to see economics as a morality play of sin and punishment, where the sinners are, of course, workers and governments, not the bankers. Pain is not an unfortunate consequence of policies, it’s what is supposed to happen.

How obsessive are these people? So obsessive that when the financial doom they predict fails to materialize, they consider this a bad thing: punishment must be administered, so what are the markets waiting for? Here’s Alan Greenspan a while back:

Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.

Gosh, it’s regrettable that the markets aren’t confirming my warnings! And today Ronald McKinnon laments, yes, laments the failure of the invisible bond vigilantes to show themselves — they’re supposed to be “disciplining the government”, so why aren’t they here?

Just to reiterate a point I’ve made before, none of this reflects actual economic theory. Throughout this crisis, people like Adam Posen and yours truly have been basing our arguments on standard textbook macroeconomics, whereas the Very Serious People have been making up stories on the fly to justify their calls for pain. As Wolf, who really seems to have eaten his Wheetabix, puts it,

The waste is more than unnecessary; it is cruel. Sadists seem to revel in that cruelty. Sane people should reject it. It is wrong, intellectually and morally.

And this cruelty rules our world

Wednesday, September 28, 2011

Miles Davis

Today is the 20th anniversary of the death of Miles Davis -- here is a tribute to a great musician.

(Disclaimer -- For years I refused to go to a live Miles concert. I was present at a N.Y. concert where the opening act was Nina Simone (a relative unknown). She WOWED the audience. No one wanted her to leave the stage.

When Miles group came out -- he wasn't there. they started (without him) "cooking" -- eventually he came out, did a tweedle-de-deedle - STALKED off the stage -- eventually came back out, back to the audience, played a few figures - walked off again. eventually he came out and played a set (sort of).

I was really young. The tickets cost me a lot (given my income). I wanted to see and hear Miles -- Nina was an unexpected bonus. She wowed me -- he did not.

At that point I vowed to NEVER again buy tickets for any Miles performance, since he might or might not actually play.

I also stopped buying albums -- unless they were "must haves".

Today I realize how important he was, how brilliant -- at the same time some of his posturing still rankles.

You do not have to love your audience -- but -- if you book a concert, at least try to show up in more than body. Show up.)


Personnel: Miles Davis (trumpet), John Coltrane (tenor sax), Red Garland (piano), Paul Chambers (bass), Philly Joe Jones (drums)


Personnel: Miles Davis (trumpet), Red Garland (piano), Paul Chambers (bass), Philly Joe Jones (drums)


Personnel: Miles Davis (trumpet), Charlie Parker (tenor sax), John Lewis (piano), Nelson Boyd (bass), Max Roach (drums) (1947)


"What I Say" written by Miles Davis performed live in Georgetown , Washington, D.C. on December 19 1970 released on "Cellar Door Sessions". Miles Davis (Trumpet + Wah Wah) Gary Bartz (Soprano, Alto Sax) Keith Jarrett (Keyboard, Organ) Jack DeJohnette (Drums) Michael Henderson (Bass) Airto Moreira (Percussion) John Mclaughlin (Guitar)


Miles Davis - On Green Dolphin street



Miles Davis - Oleo

Miles Davis: Trumpet
Sonny Rollins: Tenor saxophone
Horace Silver: Piano
Percy Heath: Bass
Kenny Clarke: Drums



Miles Davis - Trumpet
John Coltrane - Tenor Sax
Red Garland - Piano
Paul Chambers - Bass
Philly Joe Jones - Drums

Tuesday, September 27, 2011

Euro Zone Death Trip

Here is Dr. Paul Krugman's column from Monday -- if you haven't read it yet - please do. Also, follow link to original.

Euro Zone Death Trip

Is it possible to be both terrified and bored? That’s how I feel about the negotiations now under way over how to respond to Europe’s economic crisis, and I suspect other observers share the sentiment.

On one side, Europe’s situation is really, really scary: with countries that account for a third of the euro area’s economy now under speculative attack, the single currency’s very existence is being threatened — and a euro collapse could inflict vast damage on the world.

On the other side, European policy makers seem set to deliver more of the same. They’ll probably find a way to provide more credit to countries in trouble, which may or may not stave off imminent disaster. But they don’t seem at all ready to acknowledge a crucial fact — namely, that without more expansionary fiscal and monetary policies in Europe’s stronger economies, all of their rescue attempts will fail.

The story so far: The introduction of the euro in 1999 led to a vast boom in lending to Europe’s peripheral economies, because investors believed (wrongly) that the shared currency made Greek or Spanish debt just as safe as German debt. Contrary to what you often hear, this lending boom wasn’t mostly financing profligate government spending — Spain and Ireland actually ran budget surpluses on the eve of the crisis, and had low levels of debt. Instead, the inflows of money mainly fueled huge booms in private spending, especially on housing.

But when the lending boom abruptly ended, the result was both an economic and a fiscal crisis. Savage recessions drove down tax receipts, pushing budgets deep into the red; meanwhile, the cost of bank bailouts led to a sudden increase in public debt. And one result was a collapse of investor confidence in the peripheral nations’ bonds.

So now what? Europe’s answer has been to demand harsh fiscal austerity, especially sharp cuts in public spending, from troubled debtors, meanwhile providing stopgap financing until private-investor confidence returns. Can this strategy work?

Not for Greece, which actually was fiscally profligate during the good years, and owes more than it can plausibly repay. Probably not for Ireland and Portugal, which for different reasons also have heavy debt burdens. But given a favorable external environment — specifically, a strong overall European economy with moderate inflation — Spain, which even now has relatively low debt, and Italy, which has a high level of debt but surprisingly small deficits, could possibly pull it off.

Unfortunately, European policy makers seem determined to deny those debtors the environment they need.

Think of it this way: private demand in the debtor countries has plunged with the end of the debt-financed boom. Meanwhile, public-sector spending is also being sharply reduced by austerity programs. So where are jobs and growth supposed to come from? The answer has to be exports, mainly to other European countries.

But exports can’t boom if creditor countries are also implementing austerity policies, quite possibly pushing Europe as a whole back into recession.

Also, the debtor nations need to cut prices and costs relative to creditor countries like Germany, which wouldn’t be too hard if Germany had 3 or 4 percent inflation, allowing the debtors to gain ground simply by having low or zero inflation. But the European Central Bank has a deflationary bias — it made a terrible mistake by raising interest rates in 2008 just as the financial crisis was gathering strength, and showed that it has learned nothing by repeating that mistake this year.

As a result, the market now expects very low inflation in Germany — around 1 percent over the next five years — which implies significant deflation in the debtor nations. This will both deepen their slumps and increase the real burden of their debts, more or less ensuring that all rescue efforts will fail.

And I see no sign at all that European policy elites are ready to rethink their hard-money-and-austerity dogma.

Part of the problem may be that those policy elites have a selective historical memory. They love to talk about the German inflation of the early 1920s — a story that, as it happens, has no bearing on our current situation. Yet they almost never talk about a much more relevant example: the policies of Heinrich Brüning, Germany’s chancellor from 1930 to 1932, whose insistence on balancing budgets and preserving the gold standard made the Great Depression even worse in Germany than in the rest of Europe — setting the stage for you-know-what.

Now, I don’t expect anything that bad to happen in 21st-century Europe. But there is a very wide gap between what the euro needs to survive and what European leaders are willing to do, or even talk about doing. And given that gap, it’s hard to find reasons for optimism.

Have A Happy Tuesday

Now, a quick visit to "Some Assembly Required" for some more "good news" - have fun.
Please follow link to original.

Clan of the Cave Bears: Morgan Stanley analysts say that current earnings estimates suggest a 28% decline in the S&P 500. The International Labor Organization says that the world's major economies lost 20 million jobs in the last 3 years and expects that figure to reach 40 million by the end of 2012. Maybe a group hug will help.

Today in Paranoia: GOP Wannabe Michele Bachmann says that Hezbollah wants to establish training camps and missile sites in Cuba.

Charity Begins At Home IMF: The IMF announced that if it is to continue bailing out the world, it needs a bail-out itself. The $400 billion it has "pales in comparison with the "potential financing needs of vulnerable countries and crisis bystanders." European leaders told the IMF they had given at the office that they were trying to boost their own bail-out fund. The open secret is that all the money has been spent, a lot more has been borrowed and the only thing any of the financial nabobs can think to do is to conjure up some more money out of thin air. To build confidence, they say, as they happily march off to the same idiocy that brought on the Great Depression.

Accounting Note: The Bush-Cheney-Obama "war of choice" in Iraq has cost the US $1 trillion so far. None of this expenditure was matched by increases in taxation or reductions in other spending over the last ten years.

Not A New New Record: Sales of new houses declined to a seasonally adjusted annual rate of 295,000 - just above the record low for August set last year. Median prices fell 8.7% from a month earlier. The recovery is now in its third year.

Of course there's more - go there, read it.

Trader on the BBC says Eurozone Market will crash

Have to put this one up. Happy Tuesday

Monday, September 26, 2011

OnStar Is Always Watching You

This unsettling news from Joe.My.God. - please follow link to original
Please follow link to original (now, the Secret Police will no longer have to say, "Ve know vare you live")

OnStar Is Always Watching You

Even when you stop paying them.

Navigation-and-emergency-services company OnStar is notifying its six million account holders that it will keep a complete accounting of the speed and location of OnStar-equipped vehicles, even for drivers who discontinue monthly service. OnStar began e-mailing customers Monday about its update to the privacy policy, which grants OnStar the right to sell that GPS-derived data in an anonymized format. Adam Denison, a spokesman for the General Motors subsidiary, said OnStar does not currently sell customer data, but it reserves that right. He said both the new and old privacy policies allow OnStar to chronicle a vehicle’s every movement and its speed, though it’s not clear where that’s stated in the old policy.

It's a literal eye in the sky.

FEMA disaster

From "Hullabaloo" - by digby. Please follow link to original

FEMA disaster

by digby

I so don't want to write about budget battles right now that I'm just going to farm this ridiculous FEMA fight out to people who have already done it. Here's dday:

This is about setting a precedent of offsetting disaster relief funding, and nothing else. Republicans want to design a system where, every time there’s a natural disaster, some unrelated program has to pay the price. Democrats what the system as it has worked for the history of the Republic: the federal government pays for the needs of those hit by a natural disaster without smacking unrelated budgets, because it’s the right thing to do. Republicans see this purely as a matter of spending more or spending less. Democrats see it as an issue of basic morality and fairness. Should the next Katrina be offset?

And it’s also about keeping promises. In fact, the debt limit deal allowed for disaster relief funding above the spending cap on discretionary spending. You can see this right on page 13 of the Budget Control Act. It’s in Congress-ese, but it basically says that Congress can go up to $11 billion beyond the spending cap on disaster relief funding.

Republicans might say that the deal allowed for FEMA funding above the cap, but it didn’t mandate it, and nothing says you CAN’T offset disaster relief, although the Act explicitly says you don’t have to. That’s pretty weak tea. Clearly the legislative intent was to allow a safety valve in the event of big natural disasters that required immediate relief. Republicans want to pretend that safety valve doesn’t exist.

This is a real cautionary tale. To my way of thinking it's clear that these jackasses have broken the Big Deal by doing this. FEMA was provided for in it and now they are insisting that there be offsets. I don't care what kind of slimy excuses they give, that's breaking the contract and that tells you everything you need to know about just how useful these idiotic grand bargains are going to be with these people. There has never been a bigger waste of time than signing agreements with people who have no intention of honoring them.

As Kevin Drum writes:

So while those offsets might be minor on their own merits, they're basically a bellwether: if tea partiers can force Democrats to cave in on that, they can force them to cave in on every other violation of normal procedure too. Agreements will become meaningless and the budgeting process will become almost literally a free-for-all. That's what this is all about.

Dday pointed out early on that the Democrats are aware of this and, in fact, dealt with it earlier in the FAA standoff. And they prevailed. It remains to be seen if they will this time. FEMA just announced this morning that they can scrape by for another couple of days before running out of money.

"Beware the Wrong Lessons from Poverty and Income Data" Jeff Madrick:

This from "Economists View" - please follow link to original

"Beware the Wrong Lessons from Poverty and Income Data"

Jeff Madrick:

Beware the Wrong Lessons from Poverty and Income Data, by Jeff Madrick: ...The poverty data released by the Census Bureau last week may well be the straw that broke the camel’s back — the camel being those deliberately blind people who can’t seem to acknowledge that most Americans are doing poorly. Average Americans should not be the ones who have to shoulder the burden of balancing the budget, even if it needed balancing soon.

The poverty rate is now as high as it was during the war on poverty of the 1960s — about 15 percent. The Census also revealed that median household income went nowhere under George W. Bush and is now down to its lowest level since 1997, essentially before the Clinton boom.

Even more deplorable, the young in America have been hit hardest. Economists at Northeastern University have been showing for years how low wages are for those in their twenties, if they can find a job at all. Now they calculate that 37 percent of young families with children live in poverty — more than one in three. It was one in five when Bush came to office.

But the reason I am writing this is ... that the elderly have taken a far smaller hit than the rest. Is this going to be the new argument for reducing Social Security and Medicare benefits?

The truth is much the opposite: These findings are an argument for a stronger safety net. The reason the elderly are not doing as poorly is precisely because of Social Security, Medicare, and Medicaid. ...

So let’s not use these data to claim justification for cutting back social programs for the elderly. They show that the safety net is doing what it is supposed to do, which is to protect people from the ravages of a damaged economy. What we should be doing is expanding the safety net and getting the economy to start producing good old-fashioned American-style wage gains again. Can we afford new social programs for the young? Of course we can. We are among the lowest taxed of rich nations. ...

The argument that the elderly don't need Social Security is like arguing the bars on the windows are not needed because nobody's ever broken in.

Go to "Daily Kos" -- read "Tom Tomorrow"

Please follow link to original

Can European Politicians Beat the Clock and Stave Off a Crisis?

From "Naked Capitalism" - please follow link to original

Can European Politicians Beat the Clock and Stave Off a Crisis?

The Eurocrats finally seem to have realized time is running out. The abrupt market downdraft of last week appears to have focused their minds on the need for a much larger scale rescue mechanism of some form, with numbers like trillions attached, and that will move the Eurozone further towards fiscal integration, another badly needed outcome.

Your truly, along with a lot of the English language press, seems to have misread the resignation of Jurgen Stark from the ECB as a Bundesbankian repudiation of sorts. Instead, it’s a sign that Germany realizes its interests lie in preserving the Eurozone. Per Marshall Auerback:

Most of the ‘blame the Mediterranean profligates rhetoric we’ve been hearing has been diversionary, to draw local attention away from the fact that Germany’s hardcore Bundesbankers are losing this battle. .

The pan-Europeanists are the ones who will support a coordinated response to financial issues, not coincidentally because this will be the only way to retain existing benefit levels once some sovereigns and the banks exposed to them go soft.

Stark’s replacement, Asmussen, is an SPD guy and even though he makes all of the same hawkish noises, he’s not as hard-line as Stark.

Remarks from Angela Merkel over the weekend confirm that the Germans understand full well that they can’t afford a Greek exit:

Merkel rejected Greece leaving the euro area, saying that “we can’t force it, but I don’t believe in that in any case” because it would send a signal to financial markets that attacks on euro-area sovereigns can succeed.

“Maybe Greece leaves, the next country leaves and then the next country after that,” she said. “They would speculate against all the countries.” A small group of euro countries would be left at the end, deprived of the euro’s advantage as the currency appreciates, she said.

Thus Germany is going to pass its version of the TARP on Thursday, which is legislative approval of increased powers of the EFSF, which looks like a sovereign bailout device but is really a “save the French and German banks” vehicle.

The problem is now that the European elite finally realizes it needs to Do Something Big, Fast, political timelines look way out of synch with market demands. As Wolfgang Munchau notes:

The debate has focused entirely on what cannot be done rather than what can – no eurozone bond, no monetisation, no bail-out, no break-up, no this, no that. As the world is discussing the next crisis resolution steps, the European authorities are still struggling with the implementation of the ratification of the rather minor changes to the EFSF agreed by the European Council on July 21, or the perverse debate about Finland’s request for collateral. European policy has been constantly lagging behind.

This will continue. On Thursday, the Bundestag will vote on the EFSF. In October, it will vote on the next loan tranche for Greece. In the new year, it will vote on the European stability mechanism, the successor to the EFSF. By then it may have to vote on a third Greek programme, as the second, not yet ratified, programme is already way out of date. There may be second programmes for Portugal and Ireland as well. Each, of course, will require a separate vote in the Bundestag.

Berlin, however, is not the only source of uncertainty. Parliamentary majorities are melting in Helsinki, The Hague, Bratislava – and Athens. Do we really believe the Greek government can implement one austerity plan after another with a majority of five seats?

So even if Europe’s leaders were to come together tomorrow and agree on all the necessary steps to end the crisis, they would not have solved it until they could demonstrate that they enjoyed full political support. That is unlikely to be the case for a while yet.

And this presupposes they can agree on what to do. The supposed experts, the banksters, are in disarray as to remedies. From Bloomberg:

Wall Street leaders, urging coordinated action from world governments to solve the European sovereign-debt crisis, struggled themselves during four days of meetings in Washington to agree on what’s needed to end it.

The chiefs of firms including JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS), Deutsche Bank AG (DBK) and Societe Generale (GLE) SA met for three hours at the National Archives on Sept. 23. They differed on which government and private solutions may restore confidence in European debt and banks, and on some elements of regulation

In one sense, this result isn’t surprising. In fact, it’s bizarre to have US CEOs, who aren’t all that expert in a lot of the issues, try to come up with a solution (normally, you have staffers work to define issues and possible solutions, and have the CEO meetings ideally be ceremonial, or if necessary, to try to make headway on contested issue.

Their anxiety and desire to, um, help, is no doubt due to the number of shoes that might drop in the near future. From the New York Times:

“The next three weeks are absolutely critical, and they can still stabilize the markets, but I wouldn’t tell my clients to put money to work until we see it,” said Rebecca Patterson, chief market strategist at J.P. Morgan Asset Management. “As we stand right now, European policy makers have gotten well behind the curve. It’s not about the periphery anymore; it’s about the core, too.”

A fresh indicator of market confidence in European borrowers will come as Italy sells billions of euros in bonds this week, culminating on Thursday. Weak demand at an auction on Sept. 13 brough global worries about the safety of Italian debt, which stands at a whopping $2.3 trillion, making Italy one of the world’s largest borrowers.

What is more, Italy’s debt load equals 120 percent of the country’s gross domestic product. In Europe, only Greece is in worse shape, with debt totaling roughly 150 percent of G.D.P.

In addition, the Greek Parliament must vote this week on a recently proposed property tax increase that is seen as a test of whether the country will stick to past promises to tighten its belt.

Greece is also trying to show its austerity program is enough to qualify for an aid payment due in October.

And if that isn’t nervous making enough, past agreements may come unglued. Again from the Times:

Under a deal worked out in July, European banks agreed to take a 21 percent loss on their holdings of Greek debt as part of a restructuring that would give Greece more time to pay back what it owes, but now it appears political leaders in Germany and elsewhere want the banks to take a bigger hit.

Wolfgang Schäuble, Germany’s finance minister, suggested as much in a tough speech delivered to international bankers at the Institute for International Finance over the weekend. He argued that because of their bad lending decisions, bankers shared the blame for Greece’s predicament and should also share in the cost.

“Without a substantial contribution from financial institutions,” he said, “the legitimacy of our westernized capitalized systems will suffer.”

But Josef Ackermann, chief executive of Deutsche Bank and the chairman of the Institute for International Finance, quickly rejected any effort to renegotiate what had been agreed to in July. “It is not feasible to reopen the agreement,” he said.

No wonder the big banks are freaked out. These rescues, after all, are really to save their hides.

And if that isn’t discouraging enough, Paul Krugman reminds us that even if the Eurozone officialdom manages to cobble together a big enough rescue vehicle and get it passed, this is still just a bigger, better, kick the can down the road strategy that in the end will fail. These maneuvers fail to address the underlying problem of German’s high level of exports within the Eurozone, and reliance on austerity rather than growth strategies (and writedowns) to help reduce debt level in periphery countries:

Think of it this way: private demand in the debtor countries has plunged with the end of the debt-financed boom. Meanwhile, public-sector spending is also being sharply reduced by austerity programs. So where are jobs and growth supposed to come from? The answer has to be exports, mainly to other European countries.

But exports can’t boom if creditor countries are also implementing austerity policies, quite possibly pushing Europe as a whole back into recession.

Also, the debtor nations need to cut prices and costs relative to creditor countries like Germany, which wouldn’t be too hard if Germany had 3 or 4 percent inflation, allowing the debtors to gain ground simply by having low or zero inflation. But the European Central Bank has a deflationary bias — it made a terrible mistake by raising interest rates in 2008 just as the financial crisis was gathering strength, and showed that it has learned nothing by repeating that mistake this year.

As a result, the market now expects very low inflation in Germany — around 1 percent over the next five years — which implies significant deflation in the debtor nations. This will both deepen their slumps and increase the real burden of their debts, more or less ensuring that all rescue efforts will fail.

And I see no sign at all that European policy elites are ready to rethink their hard-money-and-austerity dogma.

This is all looking hopelessly ugly. I keep trying to remind myself this would make for great theater if we all didn’t have a stake in the outcome. But that line of thinking does not provide as much solace as it should.

Why This is Exactly the Time to Rebuild America’s Infrastructure

From Robert Reich - follow link to original

Why This is Exactly the Time to Rebuild America’s Infrastructure

Monday, September 26, 2011

Seems like only yesterday conservative nabobs of negativity predicted America’s ballooning budget deficit would generate soaring inflation and crippling costs of additional federal borrowing.

Remember Standard & Poor’s downgrade of the United States? Recall the intense worry about investors’ confidence in government bonds — America’s IOUs?


Last week ten-year yields on U.S. Treasuries closed at 1.83 percent.

In other words, they were wrong.

In fact, it’s cheaper than ever for the United States to borrow. That’s because global investors desperately want the safety of dollars. Almost everywhere else on the globe is riskier. Europe is in a debt crisis, many developing nations are gripped by fears the contagion will spread to them, Japan remains in critical condition, China’s growth is slowing.

Put this together with two other facts:

Unemployment in America remains sky-high. 14 million Americans are out of work and 25 million are looking for full-time jobs.

The nation’s infrastructure is crumbling. Our roads, bridges, water and sewer systems, subways, gas pipelines, ports, airports, and school buildings are desperately in need of repair. Deferred maintenance is taking a huge toll.

Now connect the dots. Anyone with half a brain will see this is the ideal time to borrow money from the rest of the world to put Americans to work rebuilding the nation’s infrastructure.

Problem is, too many in Washington have less than half a brain

Sunday, September 25, 2011

Helping the protesters

This from Hullabaloo -- please follow link to original

Helping the protesters
By David Atkins

It's no secret that the protesters on Wall Street are actively being marginalized by the press. Of course, it's also no secret that the protesters themselves are doing an effective job of self-marginalization as well through a lack of focus on media management, goal orientation and message coordination. One of the challenges of the protest movement on the left is resistance to the forms of coordinated discipline that maximize the efficacy of group action.

But this also isn't exactly the fault of the protesters. The reality is that labor orgs, Democratic clubs and central committees and other left-leaning organizations should be putting the full weight of their money, messaging and organaizing capacity into a directly anti-wall street movement. In the absence of that, particularly in New York, the action is left to a ragtag bunch of college kids and disparate activists with little in the way of media skills and organizational experience. That makes it prime fodder for very marginal groups with their own agendas to glom onto the protests for their own ends.

What needs to happen is that whatever organizational capacity exists on the left in New York that hasn't already been bought out by the financial sector, needs make itself useful, get off the sidelines and step in to help these brave people out. Ultimately we get the movement we deserve, and if only the oddest ducks are willing to put themselves on the line for actions like this, it's hard to complain too much about the marginalization of the left.

You can follow the action, provide advice and assistance (including buying them food) through resources available through the #occupywallstreet and #takewallstreet hashtags on twitter.

Just Another Old Woman

I'm also tired of repeating myself, over and over.

I would like to just STOP blogging -- but -- every time I decide to, something MORE insane happens. Something I just have to post -- even if I do not make a direct comment.

Often, a direct comment is totally unnecessary -- there's just nothing to say. Any sort of comment would just lessen the raw impact of the insanity, as if it needed explanation.

If you don't see the insanity - nothing I say can possibly help you, you poor lost soul.

So, waiting for the next dose of "teh krazy", I'm just another old woman

Saturday, September 24, 2011

I'm tired

Notice how not one of the supposed "liberal media" are saying ANYTHING about the ongoing Wall Street Demonstrations.

Also, WHEN will our "media" actually FACT CHECK anything? When will they stop giving the "flat Earth" folks equal time with those who support REALITY?

Why does our media support IGNORANCE?

Aren't you also tired?

Wall Street Demonstration

They waited til Sat. -- now, when the Wall Street area is quiet the NYC cops are first using mace, then arresting the Wall Street demonstrators.

Now, tell me this is NOT a police state. Tell me our civil liberties are still intact. Oh yeah, try to tell me the police are "our friends", and here to "protect" US.

Bull! They are here to protect the rich and their property.

The promise of America is lost.

Friday, September 23, 2011

Autumn Leaves - by many different musical folks. Happy fall.


Tri Counties Bank, Chico, California, Assumes All of the Deposits of Citizens Bank of Northern California, Nevada City, California

September 23, 2011
Media Contact:
Greg Hernandez (202) 898-6984
Cell: (202) 340-4922

Citizens Bank of Northern California, Nevada City, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Tri Counties Bank, Chico, California, to assume all of the deposits of Citizens Bank of Northern California.

The seven branches of Citizens Bank of Northern California will reopen on Monday as branches of Tri Counties Bank. Depositors of Citizens Bank of Northern California will automatically become depositors of Tri Counties Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of Citizens Bank of Northern California should continue to use their existing branch until they receive notice from Tri Counties Bank that it has completed systems changes to allow other Tri Counties Bank branches to process their accounts as well.

This evening and over the weekend, depositors of Citizens Bank of Northern California can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of June 30, 2011, Citizens Bank of Northern California had approximately $288.8 million in total assets and $253.1 million in total deposits. In addition to assuming all of the deposits of the failed bank, Tri Counties Bank agreed to purchase essentially all of the assets.

Customers with questions about today's transaction should call the FDIC toll-free at 1-800-430-6165. The phone number will be operational this evening until 9:00 p.m., Pacific Daylight Time (PDT); on Saturday from 9:00 a.m. to 6:00 p.m., PDT; on Sunday from noon to 6:00 p.m., PDT; and thereafter from 8:00 a.m. to 8:00 p.m., PDT. Interested parties also can visit the FDIC's Web site at

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $37.2 million. Compared to other alternatives, Tri Counties Bank's acquisition was the least costly resolution for the FDIC's DIF. Citizens Bank of Northern California is the 73rd FDIC-insured institution to fail in the nation this year, and the fourth in California. The last FDIC-insured institution closed in the state was San Luis Trust Bank, FSB, San Luis Obispo, on February 18, 2011.

DOJ: Perry's Texas redistricting plan intentionally discriminates

This from "Daily Kos" -- more info on our Governor "Hair" Perry -- please follow link to original.

DOJ: Perry's Texas redistricting plan intentionally discriminates

The Justice Department said late Friday that based on their preliminary investigation, a congressional redistricting map signed into law by Republican presidential candidate Rick Perry appears to have been "adopted, at least in part, for the purpose of diminishing the ability of citizens of the United States, on account of race, color, or membership in a language minority group, to elect their preferred candidates of choice to Congress."

DOJ's Civil Rights Division is specifically contesting the changes made to Texas Districts 23 and 27, which they say would not provide Hispanic citizens with the ability to elect candidates of their choice.

Ordinarily, you might say a presidential candidate wouldn't want to be accused of violating minority rights ... but with Mitt Romney lambasting Rick Perry for allowing the sons and daughters of undocumented immigrants to attend Texas colleges and universities, maybe this is just the thing he needs to convince the Republican base that he hates brown people as much as they do.


Here's a post from Dr. Paul Krugman's blog. Please follow link to original.

There's a lot of other stuff there. Go there. Read it. Click on his links. Expand your knowledge base.


It took bad thinking and bad policy by many players to get us into the state we’re in; rarely in the course of human events have so many worked so hard to do so much damage. But if I had to identify the players who really let us down the most, I think I’d point to European institutions that lent totally spurious intellectual credibility to the Pain Caucus. Specifically:

- The OECD, which a year ago demanded both fiscal austerity and a sharp rise in interest rates, because, well, because. Recently the OECD surveyed Britain, concluded that inflation is likely to decline, unemployment to rise, and that the UK should therefore … continue with fiscal austerity and raise rates. As a correspondent wrote, “What planet are they living on? What planet am I living on?”

- The ECB, which bought totally into the doctrine of expansionary austerity, despite overwhelming evidence that it was false, and proceeded to raise rates in the face of a deeply depressed economy — possibly the straw that breaks the euro’s back.

- The BIS, which called for tighter monetary policy just three months ago, to fight a nonexistent inflationary threat. Did I mention that inflation expectations, as measured by the difference between yields on ordinary and index bonds, have been plunging like a stone?

I haven’t developed a full theory of the sociology going on here. But these organizations should be doing some agonized soul-searching, asking how they got it so wrong while posing as high priests of economic expertise.

Burger Flippers, Babysitting Grandmas Show Recession Lives On

From Bloomberg. Follow link to original

Burger Flippers, Babysitting Grandmas Show Recession Lives On

Americans flipped more burgers, rented more homes, used less-expensive heating fuel and asked for more government help last year, the U.S. Census Bureau says.

More people worked fewer hours for less money. Fewer couples got married, and more grandparents cared for their grandchildren. Fewer children attended preschool, and more adults enrolled in graduate school than in 2009.

An annual survey released today, coupled with census data last week showing the highest poverty rates and lowest incomes in a generation, offers a vivid portrait of how people are struggling to cope after the worst recession of their lifetimes. Washington lawmakers remain deadlocked over how to respond.

“It’s getting worse and worse,” said Elmi Osman, 38, of Clarkston, Georgia, who began driving a taxicab after being laid off from his job at Hertz Corp. in 2008. “I don’t have a choice. I have an associate’s degree in engineering, and I cannot find another job.”

The data were released as part of the American Community Survey, an annual questionnaire sent to 3 million homes that replaces the census “long form,” which yielded results once a decade. The annual figures are used to guide the distribution of more than $400 billion in state and federal spending.
Rich-Poor Gap

The figures show that the 8.8 million American households earning less than $10,000 annually remained almost twice the number of those earning more than $200,000. The gap between rich and poor was widest in the District of Columbia, New York and Connecticut, and was lowest in Utah.

The number of households receiving cash public assistance rose 9.3 percent, to 3.28 million last year from 3 million in 2009. That doesn’t include the 1 million additional households receiving Social Security income, or the 1.9 million extra households participating in the food-stamp program. About two of every three new food-stamp recipients earned more than the U.S. poverty rate of $11,139, or $22,314 for a family of four.

More than 13.6 million U.S. households, about one of every eight, needed government help to put food on the table in 2010, an increase of 16.2 percent from 2009. Nevada added 31,000 food- stamp recipients, a jump of 48.4 percent. The largest numerical rise was in Florida, which added 204,000 -- more than 10 percent of all new food-stamp households.
Fewer Executives

Some pain was even felt in corporate boardrooms: There were almost 96,000 fewer Americans employed as top executives.

At the same time, the number of food-preparation workers grew by 97,000. And about 50,000 more U.S. households made at least $200,000 last year.

“If history is repeating itself, it would be no surprise that the rich are getting richer,” said Arloc Sherman, a senior researcher at the Washington-based Center on Budget and Policy Priorities. “Coming out of a recession, poverty frequently continues to rise.

“We’re stalling when we need to be growing,” he said.

The White House underlined that point last month, when it projected that the nation’s unemployment rate, which has hovered at or above 9 percent for more than two years, will be stuck there next year amid sluggish economic growth.

The number of workers fell 1.7 million between 2009 and 2010, while the percentage of the employed population dropped to 66.6 percent from 68.2 percent, the census figures show.
‘Recession Isn’t Over’

The average American, who worked 38.4 hours a week in 2009, was on the job for 38.3 in 2010. Hours worked by men fell to an average of 40.7 hours from 40.9; women dropped to 35.6 from 35.7.

“The work isn’t what it used to be,” said Steve Reeves, 45, a heating and air conditioning technician in Atlanta. “Even if you work, you’re not getting 40 hours.”

Reeves, who has had his job for 25 years, held onto it through the worst of the downturn. Still, his hours dropped and haven’t climbed back up. “The recession isn’t over,” he said.

The National Bureau of Economic Research declared that the recession, which began in December 2007, ended in June 2009.

Those who still have jobs are taking slightly longer to get there: The average commute climbed to 25.3 minutes, an increase of a dozen seconds. The percentage of Americans who drove to work alone climbed to 75.6 percent from 75.1 percent. Fewer people carpooled, took mass transit, biked or walked. The longest average commutes were in Maryland, where it took 31.8 minutes, and New York, at 31.3 minutes.
Home Values Fall

The collapse of the housing market triggered the recession, and census figures show that median home values continued to fall, to $179,900, down 2.9 percent from $185,200. And more people lived in less-expensive housing. Texas added more than 39,300 mobile homes, roughly 80 percent of the almost 50,000 units added in 2010.

About 900,000 housing units were added in 2010, an increase of 0.8 percent. The number of owners grew by 0.04 percent to 74.9 million. The number of renters climbed to 39.7 million, or 2.4 percent. The District of Columbia had the highest percentage of renters, at 57.5 percent of all housing, followed by New York at 45.8 percent. West Virginia had the highest percentage of owners, at 74.7 percent.

People cut back. They dropped oil or kerosene heat in favor of electricity or utility-provided gas. There were 2.4 million households that used wood as a primary heating fuel. Slightly more than 15 percent of Vermont households used wood, the highest percentage in the nation. About 1.1 million households, more than one-third in California, reported using no fuel at all for heat.
Women Marrying Later

The percentage of women who have never been married climbed to 29 percent from 28.6 percent in 2009, an increase the census bureau called “significant.” The figures were lowest in Wyoming, where 20.7 percent of women haven’t been married, and highest in the District of Columbia, at 55.8 percent, and New York, at 34.8 percent.

The number of grandparents living with their grandchildren rose to 7 million in 2010, from almost 6.7 million in 2009. Three percent of all grandparents in Mississippi took care of their grandchildren. Only 0.6 percent of Vermont grandparents were responsible for theirs.

Almost 193,400 fewer children were enrolled in preschool last year, while almost 1.2 million more adults attended undergraduate or graduate school.

Washington, D.C., had the highest percentage of people with a college degree, at 50.1 percent, and graduate or professional degrees, at 26.9 percent.
No Guarantee

Education was no guarantee of economic success for Osman, the Georgia cabdriver struggling to scratch out a living.

“When I started, I could make $300 to $400 in an average eight-hour day,” he said, standing in a line of 13 cabs waiting for fares outside a downtown Atlanta hotel. “Then it went to $300, to $250, to $200. Now an average day is $100 for 15 to 16 hours.”

He’s sticking with it, because he has to, he said.

“I’m doing this to survive and pay my rent.”


Southern Bank and Trust Company, Mount Olive, North Carolina, Assumes All of the Deposits of Bank of the Commonwealth, Norfolk, Virginia

September 23, 2011
Media Contact:
Greg Hernandez (202) 898-6984
Cell: (202) 340-4922

Bank of the Commonwealth, Norfolk, Virginia, was closed today by the Virginia State Corporation Commission. The Federal Deposit Insurance Corporation (FDIC) was appointed as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Southern Bank and Trust Company, Mount Olive, North Carolina, to assume all of the deposits of Bank of the Commonwealth.

The 21 branches of Bank of the Commonwealth will reopen during their current business hours beginning Saturday as branches of Southern Bank and Trust Company. Depositors of Bank of the Commonwealth will automatically become depositors of Southern Bank and Trust Company. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of Bank of the Commonwealth should continue to use their existing branch until they receive notice from Southern Bank and Trust Company that it has completed systems changes to allow other Southern Bank and Trust Company branches to process their accounts as well.

This evening and over the weekend, depositors of Bank of the Commonwealth can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of June 30, 2011, Bank of the Commonwealth had approximately $985.1 million in total assets and $901.8 million in total deposits. In addition to assuming all of the deposits of the failed bank, Southern Bank and Trust Company agreed to purchase approximately $924.3 million of the failed bank's assets. The FDIC will retain the balance of the assets for later disposition.

The FDIC and Southern Bank and Trust Company entered into a loss-share transaction on $798.2 million of Bank of the Commonwealth's assets. Southern Bank and Trust Company will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit:

Customers with questions about today's transaction should call the FDIC toll-free at 1-800-423-6395. The phone number will be operational this evening until 9:00 p.m., Eastern Daylight Time (EDT); on Saturday from 9:00 a.m. to 6:00 p.m., EDT; on Sunday from noon to 6:00 p.m., EDT; and thereafter from 8:00 a.m. to 8:00 p.m., EDT. Interested parties also can visit the FDIC's Web site at

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $268.3 million. Compared to other alternatives, Southern Bank and Trust Company's acquisition was the least costly resolution for the FDIC's DIF. Bank of the Commonwealth is the 72nd FDIC-insured institution to fail in the nation this year, and the second in Virginia. The last FDIC-insured institution closed in the state was Virginia Business Bank, Richmond, on July 29, 2011.

About "The History Of Greed" - an interview

From "Naked Capitalism" -- please follow link to original.

It's worth a read.

Philip Pilkington: The History of Greed – An Interview with Jeff Madrick

Jeff Madrick is a journalist, economic policy consultant and analyst. He is also the editor of Challenge magazine, which seeks to give alternative views on economics issues, as well as a visiting professor of humanities at The Cooper Union, director of policy research at the Schwartz Center for Economic Policy Analysis, The New School, a senior fellow at the Roosevelt Institute and the author of numerous books. His latest book, The Age of Greed, is available from Amazon.

Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.

Philip Pilkington: Your book The Age of Greed is a detailed historical survey of some of the key figures that facilitated — broadly speaking — the transition away from the progressive, government-regulated economy of the post-war years and toward the finance-driven, deregulated economy in which we now live. In this interview I don’t want to focus on all the figures that crop up in the book as that is done so there in great detail. Instead I want to explore the broad sweep of this history focusing both on some of the more recognisable of these figures and on the actual cultural, political and economic shift that took place over this period.

So, let’s begin.

Your story really begins in the early 1970s. In those years there were a number of figures — most of them somewhat obscure — who held beliefs or ideologies that, while quite idiosyncratic at the time, have come to dominate the debate today. These are, to boil them down somewhat, ideologies that eschew government involvement in capitalist economies and emphasise the role of the individual in society rather than the role of the society in the individual. In the book you say that these ideologies were long dormant in the US. How far back would you trace them in the form we know them today? Where were they hiding? And why did they begin to stir in the early 1970s?

Jeff Madrick: America has long been a more individualistic nation than most European nations, or even the other North American nations, Canada and Mexico. This has become a dangerous cliché among historians, but I think it is largely true. The reason I say it is dangerous is that the role of community and government in America has been generally underestimated. As I wrote in an earlier book, ‘The Case for Big Government’, community and government investment in education, infrastructure, sanitation and so on were immense. Beyond that, there were long-standing regulations in America that enabled it to grow more equitably – notably, regulations on sales of land that made it more accessible to poorer Americans.

Nevertheless, the availability of land and resources enabled many Americans to make it on their own. They believed they did it without government, especially when looking back nostalgically. They also interpreted their 18th century break from Britain ever after as a renunciation of powerful central government.

Thus, in important ways, the return to individualistic, anti-government attitudes did have profound antecedents in the national character. Progressivism got its start in the late 1800s in the US, but the strong individualistic bent suppressed social policies, nevertheless. European nations adopted Social Security systems, for example, but the US did not. These individualistic characteristics had been partly set aside by the ravages of the Depression, but not completely. America refused to adopt a nationalized health insurance program, for example.

It is often forgotten that the social policies of the Johnson era were also hard to win. The war on poverty and the civil rights movement were not moments of bipartisan agreement. In this regard, I don’t know where President Obama gets his sense of history, or how thing were done in America.

The turn against progressivism in the 1970s was mostly the result of economic crisis. But it was an easier battle to win ideologically – or that is, for people like me, to lose – than realized because of America’s past. It was mostly economically driven, if not entirely. Many disliked the Johnson Great Society, for example. They also became increasingly skeptical of Washington with the Vietnam War and Watergate.

But the rise of inflation and unemployment in the mid-1970s so severely set back the American economy and frightened people that they needed new explanations – and scapegoats. Not only did inflation soar while the economy generated inadequate jobs, but the trade and budget deficit also rose and people saw an invasion by Japanese, German and other products in their everyday lives.

It is not an exaggeration to say that America panicked. They gravitated towards the simple views of men like Milton Friedman, who blamed government for their discomfort and insecurities. Businessmen were quick to join them, beating down government intervention wherever they could. And older line progressives fought back weakly.

In 1973, Ronald Reagan, as government of California, tried to have an amendment to the state constitution adopted that would permanently cut the state income tax. Voters defeated it soundly. Some thought Reagan’s political career was over. In the next five years, economic panic took hold and Friedman’s simple, anti-government ideas became compelling as explanations.

By 1978, Californians now voted overwhelmingly for Proposition 13, which cut property taxes sharply. A successful nationwide tax revolt got underway. Progressive only five years earlier, and still believing in social programs, the nation’s attitudes changed. This change was not yet the work of right-wing think tanks and moneyed lobbyists; they were just starting to organize. It was the attitude of the people that changed and set the change for a regression in social policies and deregulation of finance and other industries.

PP: You mention Milton Friedman. It would be hard to understate his importance. The impression I got from your book is that this anti-government movement was largely fragmented and dispersed before Friedman came along. It was him that lent serious intellectual weight to the movement and gave it the sort of policy prescriptions and theoretical sanction that it needed to rally its troops.

Yet, I cannot get over the impression that Friedman was not so much rejuvenating economic theory with new ideas as much as he was reinventing something that had been discredited decades before hand — or, at least, so many thought. Could you talk a little bit about this?

JM: There were other intellectual forces out there, not least of them Ayn Rand. And there was always a strong conservative undercurrent. William Buckley was one of its leaders. Von Hayek’s 1944 book, The Road to Serfdom, was influential. It was a best seller.

But Friedman’s work was eventually thought of as very serious and congealed the movement. Its basic assumptions were hardly original at all. You are right. He basically resurrected the old classical and neo-classical lines of thought about market economies and then profoundly over-simplified them. His very accessible and even compelling book, Capitalism and Freedom, was influential partly because it was so understandable. He seemed to provide an answer. It basically said competition and freely set prices will cure most social ills to the extent they can be cured at all. Government will almost always make matters worse.

But there was nothing in Friedman that wasn’t already fundamentally in Adam Smith. He did update those notions and attached somewhat far-fetched ideas to them about the value and power of the money supply, which in truth cannot even be controlled. The nation’s obsessive focus on inflation was also his doing. Many, including Democratic economists, thought he proved his point. I think he did not, and that theories like the natural rate of unemployment, the foundation of the inflation obsession, will be dismissed fully in time. But he gave the movement intellectual credibility and he was wonderfully articulate, to boot. In truth, his intellectual contributions will not live, however.

PP: That certainly raises a lot of questions about our present moment. It seems that many economists — at least those in the media and in the public eye — have become entrenched in their positions rather than responding to circumstances which have clearly changed. But we’ll discuss this later in the interview.

For the moment, let’s shift back to the politics of the era in question. The presidency of Jimmy Carter represents for many post-war liberalism in its death throes. Underneath the shift in economic policies — Carter, for example, led the charge on deregulation and had misgivings about running budget deficits for social programs — there was a deeper moral or even existential crisis of establishment liberalism. This crisis was clearly manifest in Carter’s famous ‘malaise speech’. That speech was famously criticised by the cultural historian Christopher Lasch — whose work was supposed to have served as an inspiration for the speech — for making it seem that the president was asking working Americans to give up some of the gains they had made in the post-war years to facilitate less consumption.

You say in the book that the fracturing of the liberal project was largely due to the inflation shocks of the 1970s. Do you think that it can really be held fully responsible for the sense of hopelessness — of malaise, even — that overcame the liberal establishment in those years?

JM: I actually think explains a great deal of it. As growth sputtered, there was less money for social projects. Meantime, the liberals did not seem to have an answer for inflation. In fact, they did but they could not stick to their guns because it required a long-term strategy of slowly unwinding inflation. That was probably politically infeasible. Too often, when something doesn’t work in time to have political potency, people abandon their ideas. Strong non-inflationary growth would have brought more people out of poverty and provided enough money for a national healthcare plan.

But the liberal project had some fallacies – the fallacies of excess. Unions did push wages too high in some areas and created an inflexible economy in some industries. Other non-union salaries followed suit. Some liberals could not face the need to reduce the wage share of the economy. This was their problem.

Carter was a fiscal conservative, mostly a true blue Republican in this regard. He tempered it with true caring about the poor and unemployed. He had an unimaginative response to what he saw as an age of limits. We wanted too much, such as oil, and this caused inflation. Let’s want less. Not a strong message, really, and it was wrong.

But if there had been no serious inflation, the progressive tendencies may have survived their enemies – especially those who thought any social programs were giveaways to the lazy and unworthy.

PP: Correct me if I’m wrong but I believe that there was much buzz about wage and price controls in the liberal establishment of the era. Nixon, of course, had given them a half-hearted shot in the early 70s but the innate conservatism of his economic advisers had ensured that they couldn’t be used effectively. My feeling is that these would have worked if given half a chance – after all they had been remarkably effective under Galbraith in the far more extreme environment of WWII. So, why weren’t these taken as a serious policy option by the liberal establishment of the era? Surely they would have been a ‘quick political fix’ if there ever was one.

JM: Wage and price controls had already been developed before 1971, when Nixon imposed them. But Democrats still were favourably on balance. John Kenneth Galbraith had imposed the controls as part of his government duties during World War II. The nation also had some success with them in the Korean War. Paul Volcker, then a key economic advisor for Nixon, definitely favoured them but Nixon stepped on the gas by huge fiscal spending to drive up the economy when he had the freeze so that he could get re-elected.

His wage-price freeze simply was not a serious attempt. He then undid them too abruptly. The Democrats considered them in the Carter term and did indeed impose ‘guidelines’. These could have worked if they had been willing to stick with them but Carter wasn’t willing and the nation was changing, as I noted. Market solutions, not government interference was generally gaining the upper hand ideologically and the Democratic economists never fought back with sufficient determination.

PP: But that means the solutions were there if the Democrats wanted them and they were well aware of them. That they didn’t pick them up and put them into practice means there must have been some sort of cultural shift or moral malaise; it seems to me that this is the only thing that can explain liberals’ flakiness in this period. Maybe your point about the Watergate scandal and the Vietnam War destroying confidence in government might explain this reluctance to wield power? Could you talk a bit more about this?

JM: Yes, as I have been saying there was a cultural anti-government shift in opinion and in the media. This is my main point. Liberals could have fought against it but did not. It wouldn’t even have necessarily worked politically. They would have been pushed out of office unless they were persistent and determined. They were not. In fact, many Democratic economists had strong doubts, already participating in the shift towards laissez-faire attitudes.

The ‘malaise’ was really just simple pessimism. Nothing had seemed to work for years to solve the economic problem of inflation. Carter actually never used the word ‘malaise’ in his speech – but the key point is that he was no good at puncturing the pessimism. Reagan, the mythmaker, was remarkably good at it.

PP: That was going to be my next question. Reagan was, of course, a master orator and a man of considerable charisma and charm. Nevertheless, even without considering his personal qualities, his message seemed to resonate with the times. Could you talk a little about Reagan and how he ‘clicked’ with the American public at this important moment in history?

JM: Well, it is important to remember that he didn’t click national at first at all. He won in California as governor at a time when the state was disturbed about racial issues and the Berkeley free speech movement. He talked tough and his opponent did not take him fully seriously. Then he governed not quite as conservatively as he talked.
What he did best was to understand the concerns of working people, which was his heritage. He didn’t believe – and this is widely misunderstood and misreported – in Friedmanite self-interest. He believed in individuals – that hard work would pay off and we could make our own lives.

He kept trying to get the presidential nomination – in 1968 and then again in 1976 – and failed. But while he failed, he did countless radio speeches – short essays – which forced him to develop his opinions in many areas. He understood the value of a simple story with a cathartic climax. He was conscious enough of his intentions to write this in so many words.

But he was always a Manichean over-simplifier. There was, as in Hollywood, always a bad guy. Early, when he was a New Dealer, business was the bad guy. In the 1950s, he switched; government became the bad guy. As of course was the Soviet Union in international affairs.
When the nation’s views turned in the 1970s, he exploited this well. He stuck to his guns for more than twenty years and his moment came. He radically cut taxes and regulatory staffs, and extended the angry attitude of Americans towards government to tragic ends.

PP: You say that his popularity in California was disturbed by racial issues and the free speech movement – in essence, California was disturbed by what have come to be known as the ‘sixties’. Do you think that the ‘sixties’ and the attitudes that grew out of them had wider and broader cultural effects? Do you think they helped facilitate the turn to Reagan’s rhetoric of ‘individual responsibility’, responsibilities rather than rights; in short, the turn to conservatism?

JM: Yes, there was a reaction to the new social policies and ‘looser’ lifestyle of the Sixties. The social policies had many angry – they mostly helped people of colour, it was thought, or ne’er do wells. There has always been that strain in American politics, this time tinged with racism because of the Civil Rights Act and integration. Also, liberals went too far with busing.

But the catalyst was still the bad economy. There always would have been a pendulum swing, but it probably would have been modest as baby boomers became adults with families.
PP: Let’s move on to Alan Greenspan. In your book you portray Greenspan as a rather mediocre figure, as far as ideas and economics goes. This runs counter to the narrative we’re all used to — the narrative of the ‘master of the universe’ with his finger firmly on the pulse of the world economy. You portray Greenspan as a savvy political player and a free-market ideologue in the crudest of sense, but little more than that. Could you talk about this a little bit?

JM: I certainly would not call Greenspan mediocre. He was a competent Wall Street economist with great talent for networking, assessing the political winds, and positioning himself in a niche where there was little competition – that is to say, articulate Republican economists in the 1970s. He could talk persuasively to businessmen and politicians alike.

But he was, as I say, a Wall Street economist who did not have a sophisticated model of the economy, but instead a by-the-pants model. He also an ideologue with a simplistic notion about laissez-faire economics that he partly derived from the views of Ayn Rand. He suppressed these views, but as his reputation rose, he became more confident that less regulation of financial markets was ideal.

It was based on the most simple ideas about the moderating value of competition. They were decidedly pro-business which, as I explain in the book was probably a leaning he had since childhood. As a Fed chairman, he was intent on suppressing inflation above all other things, also a reflexive Republican attitude.

His actions to keep rates down in the late 1990s have been misinterpreted. He kept them down less because he believed in a new economy than his fears about the financial crises over Long-Term Capital Management and Russia.

In the end, he had more to do with the financial crisis than any other single individual because he refused to regulate and oversee the financial community properly. He insisted derivatives needed no serious regulation. This was purely ideological. He approved of the merger that resulted in Citigroup. He had no idea of the level of risk on Wall Street that he more than anyone else was responsible for.

PP: Perhaps I shouldn’t have used the term ‘mediocre’. My impression from your book was that Greenspan was not much of a theoretical economist – as you say, he was more of a ‘hands on’ kind of guy with an overarching ideology. Do you think that this led his policy in many ways? Purely practical people tend to only pay attention to flaws in a system when things start to go wrong – should such a person truly been in charge of the Federal Reserve?

JM: I don’t think you have to be a theoretical economist to run the Fed. Greenspan didn’t get a PhD but even that need not be an obstacle. He was an ideologue who suppressed his ideology. His one fight was against inflation. He was determined to be as good as Volcker at beating it down. Like most Republicans, he wanted to show that he was tough. His economic analysis was more ground in day to day changes in the economy with little sense of economic dynamics or Keynesian disequilibria or long-term damaging equlibria. For these more subtle concepts, he’d have no sympathy. My personal view is that he was guided by the bond rate. If it went up fast, it meant there were inflationary expectations which he was determined to beat down. He overkilled on inflation, of course. But he also backed off in the late 1990s. Many attributed this to his prescience about the New Economy, regarding which he had sophomoric views. He kept rates down, instead, because of the economic crises in Asia, Long term capital management and in Russia. He suppressed his ideology for a while but as the adulation for him increased, he became increasingly ideological – much to the detriment of us all. He was more responsible for this crisis than anyone else by far. And that was purely down to his ideology.

PP: Okay, let’s move onto Clinton. I was surprised he wasn’t included in your book. Carter was there but not Clinton. Yet, Clinton’s administration oversaw some of the most substantial deregulation of any period which culminated in the elimination of Glass-Steagall. Clinton also oversaw what some might consider a sort of mania for a balanced budget – one that may well have pushed the household sector into a net borrowing position. The Clinton period was also the time when asset bubbles began to seriously float deficient economic growth – I refer, of course, to the DotCom bubble. Could you talk about all this?

JM: I talk about Clinton quite a bit in the book, as you know. More deregulation occurred during his administration than others. But much of the story is familiar. I tell this story through Wall Street and Alan Greenspan. In particular I discuss how Bob Rubin and Larry Summers convinced Clinton that any surplus be put back into the bond market. I also cite Clinton’s claim that it was the end of the era of big govt.

But the big trends were already underway when he took office. Clinton did not stop them. The mania for budget balancing really began in the 70s. It intensified in the 80s with the Reagan deficits. George HW Bush was determined to tame them and had a tax increase passed. Then came Clinton’s tax cuts and they seemed to work.

Meanwhile Greenspan raised interest rates unnecessarily, akin to a kind of shock therapy. Rates came down and a boom got underway, supported more by financial asset inflation than was realized. Ever the fantasist, Greenspan pinned it on high technology and allowed rates to fall more. But Clinton, only and always trying to get credit, attributed it to the tax increase and a balanced budget. Rubin believed that this reduced the crowding out of private borrowing. Never mind all the financial crises in Asia, Wall Street and Russia. Greenspan just stepped on the gas, lowering rates and all the while alluding to a new economy which was at best partly true. Under Clinton the Democrats became the Wall Street party and his refusal to support regulation of derivatives in 1994 and 1999, under the guidance of Rubin, the former Goldman Sachs co-chief, and Larry summers, the former Keynesian, eventually led to a terrible debacle. They greatly admired Alan Greenspan and never crossed him. Keep in mind, much of the Democratic congress went along. Wall Street got a hold of Washington – and they never let go.

PP: Sorry, I should have said that you didn’t give Clinton a section in the book — of course you do talk about his policies.

I want to talk a little more about the balanced budget. The notion that a budget should be balanced all the time appears to me farcical. Not simply from an economic perspective but also from an historical perspective. Most of the time most developed countries run deficits — if they didn’t they wouldn’t have stocks of public debt. There is, in my mind, without a doubt a link between unbalanced government budgets and capitalist economies.

Yet, the idea of balanced budget has been something of a millstone around the necks of liberals and progressives since at least as far back as Roosevelt. Why do they let the other side lead the debate in this instance? Why do they cling to balanced budgets when it seems so obvious that unbalanced budgets are the historical norm?

JM: Quickly, balancing budgets goes back much farther than FDR. After all, excessive government expenditure, especially on war, has brought down many governments over the centuries. Modern theory suggests budgets should be balanced over the course of the business cycle – not all the time. I don’t agree they need be balanced over the cycle, though. I think there is probably an endemic insufficiency of demand due to inadequate wages, so a persistent, if not constant deficit makes sense. Also public investment will have a positive rate of return – usually.

But balancing the budget is a political football. The Right demands it. They always claim it leads to inflation and crowding out. The Democrats like it when the Republicans run a deficit as under Reagan and George W Bush. There is both hypocrisy and bad economics involved in the whole deficit discussion, unfortunately.

PP: I’d tend to agree with pretty much all of that.

Moving on to the present day after all that was built over this era has collapsed in upon itself, what do you think the future holds? I mean that both from the perspective of regulation — I note that Regulation Q, the bypassing of which you portray in the book as a pivotal moment, just two months ago was cut back to allow interest to be paid on checking accounts. And then there’s the issue of actual economic growth which seems mired due to government reluctance to pick up the mantle after beating themselves down all these years?

In these respects what do you make of this brave new world?

JM: I find it hard to believe that more policymakers, editorial writers and pundits don’t ask whether Wall Street should have as central a purpose in our economy as many take for granted. We should be asking whether Wall Street – that is, the financial community – is justified at all in its present size. The main question my book raises is whether the financial sector does more harm than good. Those who are for re-regulating of Wall Street, including Dodd-Frank and the Obama administration, have never gotten to first principles though. The regulation as proposed will not adequately cut the Street down to size. The institutions should be cut in size and streamlined along product lines that reduce conflicts of interest. Those that take federally guaranteed deposits should be ring-fenced. Those that underwrite or privately place securities should not take deposits and have no access to the Fed discount window. Speculation has to be seriously limited to small institutions through the use of higher capital requirements.

At the same time, a few legal actions have been taken against unethical practices on Wall Street. It is remarkable that so few criminal charges have been made, and that civil cases are settled through relatively small fines to avoid going to court. Fraud law, both legislative and common law (tested by brining cases), must also change.

Without adequate changes that ensure that Wall Street channels money to productive uses, America will have a hard time getting money where it is needed in the economy.

In the meantime, this administration believes that all it needs do is to revitalize finance and credit and this would re-inflate the economy. At the same time no serious attempt was made to make mortgage holders whole – at least in some degree – which is a tragedy.

People are frustrated. A mid-July survey found that most Americans believed Wall Street did more harm than good. My book is about showing how that happened – and indeed, without doing a statistical analysis, I think the book shows that it did happen.

Pair this with the mistaken assumption that fiscal austerity is required to re-structure the US economy, and we probably face a very hard time ahead.

Other nations, on the other hand, have asked the question about the purpose of finance and proposed more stringent solutions, such as the Vickers Commission. Maybe that’s a start.