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Tag: President Obama (Page 2 of 3)

Will The Deficit Kill Us?

Joseph White has written a timely article. In the past few weeks we have been deluged with dire warnings about the deficit, sometimes they featured the Chinese, sometimes the destruction of social security; it was all very dramatic. Then when the continuation of tax cut became an issue, it all faded a way until the wealthy were assured their tax cuts. It was a budget buster of colossal size, totally unsupportable. It will cripple the government in financing every expenditure save those supported by their own fees.

Now that the wealthy have their money, the deficit has returned as an issue. We must cut back on entitlements. We must find cuts in education, etc.

The two-faced asinine clowns of the beltway would be funny if they weren’t taken so seriously.

Joseph White in the article quoted below has doubts as to the importance of deficit reduction.

I have similar doubts about the dangers of the deficit. However, the idea of deficit reduction now in the midst of the Second Great Depression strikes me as far more serious and dangerous. Such austerity reduces the size of any recovery and delays it. I have seen estimates of up to ten years of recovery to return to 2007 levels of employment.

We need a serious national discussion about expenditures. We will not get it from Obama’s stacked commissions or the “beltway boys.” The big act is that these are not matters of dispute. “Everyone recognized the danger of deficits.” “Like a well functioning family, a nation must not have any debts.” Etc.

Those are not settled matters. There are far more nuances to national debt management than any family budget.

As usual, I call with little hope for actual intelligent thought.

This is written by Joseph White at the Financial Times –

In the 1980s, deficit hawks recognized that, in the words of former CBO Director Rudy Penner, , “the crisis is there is no crisis.” In other words, the deficit wasn’t actually hurting people much. But it could, eventually, like “termites in the basement” as former OMB Director Charlie Schultze put it. How could this be dramatized?

One approach was to make arguments about the economic good that would be accomplished by reducing deficits. The idea was that lower deficits would produce greater national savings so more investment and a larger economy. Unfortunately, the standard economic estimates (such as by CBO) did not project enough extra growth to convincingly justify the pain of the deficit reduction. (Would you have abolished the Navy and Medicaid so that the economy would be 3% bigger thirty years later?). So deficit hawks promoted two other arguments, each of which should sound familiar.

One was to invent scenarios about what would happen if absolutely nothing were done for decades – a highly implausible case, but one that could, with sufficient assumptions, lead to economic disaster. The point was to promote so much fear that the goal of deficit reduction would take precedence over messy, uncomfortable subjects like the consequences of any particular means of reducing the deficit.

The other was to claim that “the markets” would eventually turn against the U.S. government and U.S. economy because of the spiraling debt, forcing some sort of payback that would make everyone miserable. …

I had never thought about it the way he presents it. I think this is similar attitude to Paul Krugman.

I recommend it to your reading and thought.

James Pilant

Banks Suffer Major Setback

When foreclosing on mortgages the banks have been skipping the rule of law. They have not followed the rules for the transfer of property preferring to pretend that their electronic records are a viable substitute. I never believed the courts would go along with that and the Massachusetts court did not. Here’s the story from that excellent blog, Rortybomb.

From RortybombBig Week in Foreclosure News

The biggest news is the decision in Massachusetts’ “Ibanez case”, where the Massachusetts Supreme Court voided the seizures of two homes by Wells Fargo and US Bank based on their inability to show that they owned the mortgages at the time of foreclosure. Tracy Alloway walks you through the case, David Dayen has more including the PDF of the decision, and analysis from Yves Smith and Felix Salmon.

From the opinion: “Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.”

They ruled through Massachusetts law instead of New York law, so no answers on looming New York trust law. Bank stocks are down. This is likely to have major implications down the road. We’ll have more on this opinion later.

I do not believe the ruling will stand. Congress will ride to the rescue of the banks legalizing their reckless disregard for state law and afflicting the suffering homeowners with even more pain. Congress will enact it. Obama will sign it. He will then explain it as a major legislative victory. Everything he does merits a press release and a couple of morning show appearances demonstrating his successful legislative record.

I wish there was someone somewhere who was as concerned with the rights and privileges of the American middle class and less concerned with the welfare of the banks.

James Pilant

Banks Suffer Major Setback: The Use of MERS – electronic property transfers – is not valid for mortgage foreclosures

When foreclosing on mortgages the banks have been skipping the rule of law. They have not followed the rules for the transfer of property preferring to pretend that their electronic records, MERS, are a viable substitute. I never believed the courts would go along with that and the Massachusetts court did not. Here’s the story from that excellent blog, Rortybomb.

From RortybombBig Week in Foreclosure News

The biggest news is the decision in Massachusetts’ “Ibanez case”, where the Massachusetts Supreme Court voided the seizures of two homes by Wells Fargo and US Bank based on their inability to show that they owned the mortgages at the time of foreclosure. Tracy Alloway walks you through the case, David Dayen has more including the PDF of the decision, and analysis from Yves Smith and Felix Salmon.

From the opinion: “Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.”

They ruled through Massachusetts law instead of New York law, so no answers on looming New York trust law. Bank stocks are down. This is likely to have major implications down the road. We’ll have more on this opinion later.

I do not believe the ruling will stand. Congress will ride to the rescue of the banks legalizing their reckless disregard for state law and afflicting the suffering homeowners with even more pain. Congress will enact it. Obama will sign it. He will then explain it as a major legislative victory. Everything he does merits a press release and a couple of morning show appearances demonstrating his successful legislative record.

I wish there was someone somewhere who was as concerned with the rights and privileges of the American middle class and less concerned with the welfare of the banks.

James Pilant

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Obama Broke His Promise To “Take A Back Seat To No One” On Net Neutrality

From Freepress’ news release

“The new rules are riddled with loopholes, evidence that the chairman sought approval from AT&T instead of listening to the millions of Americans who asked for real Net Neutrality. These rules don’t do enough to stop the phone and cable companies from dividing the Internet into fast and slow lanes, and they fail to protect wireless users from discrimination. No longer can you get to the same Internet via your mobile device as you can via your laptop. The rules pave the way for AT&T to block your access to third-party applications and to require you to use its own preferred applications.

“Chairman Genachowski ignored President Obama’s promise to the American people to take a ‘back seat to no one’ on Net Neutrality. He ignored the 2 million voices who petitioned for real Net Neutrality and the hundreds who came to public hearings across the country to ask him to protect the open Internet. And he ignored policymakers who urged him to protect consumers and maintain the Internet as a platform for innovation. It’s unfortunate that the only voices he chose to listen to were those coming from the very industry he’s charged with overseeing.”

Well, just another day with the President’s decisions. In a way, it’s entertaining. After all, with many politicians their previous statements are often a guide to their actions. But with the President, it’s one surprise after another.

James Pilant

Obama Staffer Finds New Job – Citibank!

From Huffington Post

Citigroup Inc named U.S. President Barack Obama’s former budget director as a senior global banking adviser on Thursday, strengthening its ties to high-profile former officials the same week the bailed-out bank finished shrugging off U.S. government ownership.

Peter Orszag, currently a senior fellow at the Council on Foreign Relations, is Citigroup’s second hire of a former senior government official this month. Last week the bank hired Carlos Gutierrez, former Commerce Secretary under President George W. Bush, as a vice chairman for its institutional clients group.

Orszag, who had worked as director of the Office of Management and Budget under President Obama, left the White House in July. He was one of the president’s most prominent advisers and remains well-connected in U.S. political circles.

As a presidential adviser, wouldn’t he have a played an important perhaps critical role in the bailout (TARP)? Would it be likely that he had a role in making sure there has been no prosecution of the crimes committed by the banking sector during the past two years? Wouldn’t etc., etc?

Is this pathetic or what? How long has this deal been in place? Did he always know there was a warm place for him at Citibank? Or was it just part of the expectations of the job? What’s he going to get, 5 mil, 7 mil, not counting stock options, the company car and the other goodies?

What is this? What is this place where the people who are supposed to be protecting us are the employees of banks, apparently on some kind of rest cure in the oval office until returned to duty?

Wasn’t this supposed to be a different kind of Presidency, you know not run by lobbyist? Well, they keep the lobbyists at a comfortable distance – inside the White House.

James Pilant

Jon Stewart Explains Aftermath Of Budget Deal

Jon Stewart

From the Huffington Post

(Click the link to see the video.)

Have people been too hard on President Obama? On Thursday night’s “Daily Show,” Jon Stewart approached this topic based on the American people’s response to the President’s recent tax cut deal. At his most recent press conference, you didn’t even need to have the sound on to see how annoyed Obama was.

Stewart pointed out that Obama has always been frustrated with Republicans, but now it seems like he’s become disillusioned with his own supporters. At the press conference, he defended his compromise with Republicans that even the richest Americans would keep their tax cuts and unemployment benefits would be extended. When Obama said it was like the public option battle all over again — no one caring if a much-needed bill was passed because of one compromise that was made — you could really see how frustrated he was.

As always with Jon Stewart it is difficult to add anything to what he has to say, so I’ll let the video say it.

By the way, I am troubled by the not clear connection between this and business ethics. But the tax structure and unemployment are vital elements of the business world and whether or not these actions are just and moral. Should the wealthiest of Americans get a tax cut when so many are unemployed? That’s a business ethics question. At what point is there a shared bond between Americans requiring even a minimal sacrifice? That’s an ethics question.

James Pilant

Obama To Lower Corporate Tax Rate!

From Reuters

Democrats and Republicans should begin a conversation next year about a broad overhaul of the tax code that would involve lowering rates while eliminating tax breaks for favored groups, President Barack Obama said in an interview broadcast on Friday.

The Republicans now have a majority in the House. Shouldn’t this have been something done during the first two years?

Obama said any effort to streamline the multilayered U.S. tax code would be challenging but if successful, it could set the stage for more robust growth.

Okay guys, I’ve been around the block a few times and when ever someone talks about simplifying the tax code, the middle class is about to get nailed hard. By the way, “robust growth” is a code word for lower corporate taxed and business benefits like subsidies.

Tax reform is an idea backed by many in the business community who say the current corporate tax structure puts American firms at a competitive disadvantage.

For “many in the business world,” read every corporate lobbyist is salivating like a hungry German Shepherd in front of filet mignon.

“Typically, the idea is, simplifying the system, hopefully lowering rates, broadening the base — that’s something that I think most economists think would help us propel economic growth,” Obama told National Public Radio in an interview. “But it’s a very complicated conversation.”

Verbiage – means nothing.

“So what I believe is, is that we’ve got to start that conversation next year. I think we can get some broad bipartisan agreement that it needs to be done. But it’s going to require a lot of hard work to actually make it happen,” he said.

For “work” read continuous concessions stretched out over months so that the lack of backbone, resolve and political intelligence of the Obama White House will be fully revealed.

“Change You Can Believe In.” Yes, in the same way I believe in post-apocalyptic waste lands.

Explain this to me. For decades large corporations have been directly evading, off shoring their corporate headquarters, sometimes just not paying taxes, and blackmailing every State, county and city humanly possible to cut their taxes, so we reward them with lower rates?

And here I am again trying to teach business ethics to my students who will observe the real life machinations of our President, which means, I get to say, “Okay, do the right thing, everyone from the President on down will reward the other guys, but you still be good.”

Then I get to go into “good for your soul” argument which is pretty much all I got left at that point.

Writing a business ethics web blog under this Presidency has all the benefits of being a medieval flagellant.

James Pilant

I Was Wrong – The TSA (Transportation Security Administration) Should Be Abolished

When the humiliating scanners and grope searches were put in place, I believed that the government could be convinced to make changes that would respect human dignity and American rights.

It has become evident that the government from the President on down, have no interest in having a discussion on the issue. They have made it clear that they will not change course.

Their response to the legitimate claims of American citizens have been a rush of public officials and “so called” security experts to explain that this is absolutely necessary and that those who oppose these measures do not understand the dangers. At every point in this series of events, those criticizing the policies have been insulted, marginalized and ridiculed.

I have predicted and I firmly believe that the government’s next step will be to blame people with views like mine of empowering the terrorists.

Based on my observations of what has happened so far, it is now evident that private screening companies are far more amenable to public opinion and criticism than the government of the United States.

The government has taken the position that criticism on this issue is the result of internet activists and paranoid zealots.

I have long been a critic of private industry and the common abuse of citizens by exorbitant fees and other wrong doing.

But the government has indicated through its actions that criticism is not acceptable.

It is as if the government itself were a private corporation acting as if its actions were merely its own concern.

This is wrong.

Destroying this regulatory agency will be an important signal to the government to heed the people of the United States and their legitimate concerns.

I do not believe that this administration has any interest in middle class Americans, their struggles or their concerns.

James Pilant

Foreclosure Judges Fight The Good Fight

Alain Sherter (who I do not write enough about) has a excellent column titled, “How Local Judges are Putting the Feds to Shame In Halting Improper Foreclosures.”

Here’s a selection from it –

Consider this astonishing stat drawn from a WaPo story today: Courts in the area are estimated to be dismissing upwards of 50 percent of foreclosure cases against homeowners because of slipshod — or outright fraudulent — paperwork filed by lenders. Banks are appealing many of these decisions, a sign of just how afraid they are the rulings could embolden courts around the country to follow suit:

In millions of cases across the United States, local judges have wide latitude to impose sanctions on banks, free homeowners from their mortgage debts or allow the companies to proceed with flawed foreclosures. Ultimately, the industry is likely to face a messy scenario — different resolutions by courts in all 50 states.

Sherter puts his finger on what I try to communicate to my classes. Attorneys and Judges are not the Ogres portrayed on television. It is true that are some very, very bad attorneys. I hold them in contempt. But you would be astonished and impressed by the attorneys I’ve met who fight for their clients for little money, sometimes no money. This whole mortgage foreclosure mess would never have come to light, if it weren’t for attorneys working for next to nothing trying to keep people in their home.

He makes another point in both the title and inside the article.

Federal bank regulators are equally intent on keeping the foreclosure assembly line moving. That’s no surprise, given that they’re deeply implicated in the foreclosure mess. For instance, state financial supervisors turned to the OCC in 2007 after JPMorgan Chase (JPM) and Wells Fargo (WFC) stonewalled their investigations into improper foreclosures.

Not content to simply ignore the problem, the OCC actually made it worse. Protecting its authority to oversee national banks, a doctrine known as “preemption,” the agency shooed the state enforcers away. Then it asked the banks to look into the matter.

I said exactly the same thing in one of my posts – If you are waiting for the Obama administration to come your rescue, you are going to be waiting a long time.

James Pilant

They’re Afraid!

The business community finds the President to be confrontational. He has viciously criticized them. They don’t think he’s really devoted to free markets. They’re worried.

This is incredible. President Obama barely touched them. His anti-business talk was so limited it barely existed. This is their reaction to the small amount of criticism they got from the President.

This is from Politico –

And business leaders, even the few who continue to be Obama-friendly, say they are convinced he is hostile to free markets and the private sector. Some of these executives have balance sheets flush with cash but are reluctant to add jobs or expand in part because they don’t trust Obama’s instincts for growth.

“He used anti-corporate, confrontational rhetoric too for legislative gain, and kept doing it after folks found it gratuitous,” a top executive said. “During health reform it was the bad, evil hospitals. . . Same with financial regulation: It was fat cats, greed, corruption.”

They can’t take even the mildest criticism. Is this pitiful or what? The President cuts deals on health care with the industry. The President declines to prosecute or go after the banks politically. The President protects British Petroleum. The President guts financial reform. The President refuses to create a foreclosure moratorium or to change his HAMP program to get more people out of foreclosure.

And this is their response! He’s confrontational. When?

These guys live in an alternate world. Any criticism is just totally unacceptable in their minds. In spite of all that has happened over the last decade, the great corporations are guiltless. In spite of bonuses, in spite of the destruction of millions of American jobs, in spite of regular defiance of the law ranging from the environment to playing the stock market, in spite of acting as if their duty to their country, their states and their communities was non-existent and in spite of a level of patriotism, Aaron Burr would have found acceptable, their feelings are hurt.

What is this? Are they the political equivalent of a 12-year old girl at her first cotillion?

What do I draw from this?

First, their contact with the vast majority of Americans is about non-existent.

Second, they’re political wimps. They can’t take it.

Third and the main point, they live in fear of those great unwashed masses. You know, the ones they have mercilessly exploited, them guys. They realize that there could be accountability

They realize that they are one step away from being cut, from people walking over to the other side of the street, from criticism in the press, from being named as what they are. They’re cowards, closer to cartoon villains.

They should be made to watch the movie, “They Live,” once a year.

Part science fiction thriller and part dark comedy, the film echoed contemporary fears of a declining economy, within a culture of greed and conspicuous consumption common among Americans in the 1980s. In They Live, the ruling class within the moneyed elite are in fact aliens managing human social affairs through the use of a signal on top of the TV broadcast that is concealing their appearance and subliminal messages in mass media.

Maybe twice.

James Pilant

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