Posts by Ian Welsh

Ian Welsh is the managing editor of The Agonist and a sometime contributor to FDL and the Huffington Post.

Why This Economic "Recovery" Will Be the Worst of Your Lifetime
Posted by Ian Welsh, Open Left on October 13, 2009 at 12:37 PM.

It seems that Summers is congratulating himself for having saved the world from the Great Depression:

The Obama administration has helped pull the U.S.  economy back from the "abyss" with aggressive efforts to spur growth and  stabilize financial markets, a top White House adviser said on Monday…

…"Thanks largely to the Recovery Act, alongside an aggressive financial stabilization plan and a program to keep responsible homeowners in their homes, we have walked a substantial distance back from the economic abyss and are on the path toward economic recovery," Summers wrote to House Republican leader John Boehner.

All they did was throw cash at the problem, without dealing with the underlying issues, which is why they didn’t manage (as Jerome points out) to kickstart ANY net private spending.  They didn’t break up major banks.  They didn’t allow bankruptcy judges to rewrite mortgages.  Their mortgage program kept hardly anyone in the house.  And their money for financial firms did not increase lending by one cent.

So, as a Stirling Newberry likes to say "the economy breathes fine, as long as we don’t unplug the life support machines."

That’s all they did - throw the economy on life support by hooking it up to a money spigot, then wander off and have a cup of coffee and tell each other how brilliant they were, not noticing that they hadn’t actually cured the patient.

This is going to be the wost “recovery” of your lifetime, unless you’re in the financial sector at a relatively high level.  Bank profits have recovered but ordinary people are not, in a generation, going to see a full recovery from this clusterfuck - employment will not recover to pre-recession levels before the next recession, and I don’t expect it to recover after that recession either.

At this point, in fact, I am expecting this to turn into a double dip recession—this "recovery" will not have any significant legs.

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It's Time to Hit the Phones to Stop the Econopocalypse
Posted by Ian Welsh, Firedoglake on February 5, 2009 at 5:01 AM.

It's time to hit the phones for the stimulus bill.  Calls are running a 100:1 against.  Yes, it's not that good a stimulus bill, I've said so myself, but it's not a case of scrapping it and starting over, what looks likely to happen is that it gets badly watered down with bribes to Republicans and "moderate" Democrats like Ben Nelson to get it through.  As Our Future noted in their action email, this probably means changes like:

-Giving corporations a 30% tax cut, instead of investing in clean green energy that will put people to work.

-$3.1 trillion in tax cuts for the wealthy that we know simply don't work to create jobs.

-Less help for states that will be forced to lay off workers, instead of funds to retain police and teachers.

Let's be really clear on this.  The rich got their bailout with TARP, 700 billion, they're already getting tax cuts in this package, and it looks like the way the proposed bad bank is going to be done is hundreds of billions or even trillions more of bailout for rich people.  What the stimulus is is the only money that regular people; that you, are likely to see.  This is whether your State has to to cut teachers, whether there's health care for people who lose their jobs and whether there's a cop or firefighter to come when you call. 

Even more, while I can't say that passing the stimulus bill will prevent a Depression, I can say that the more it's watered down, the more likely a Depression becomes.  That's probably what Republicans want, since it would mean a better chance of electoral victory for them (what Ben Nelson and other "moderate" Dems are thinking, I have no idea.  I assume they're just stupid enough to think tax cuts work despite never having done so for 30 years).  

So, please, hit the phones and let your Senators know that you expect the bill to pass with no further watering down or gifts for the rich.  The Congressional Switchboard operator is at 1-866-544-7573. Remember, be polite, but let them know where you stand.

(List of Senators who need particular attention, below the fold):

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Why I'm Not Broken Up About Daschle
Posted by Ian Welsh, Firedoglake on February 4, 2009 at 5:24 AM.

My first reaction upon hearing that Daschle had dropped out as HHS nominee: relief.  Yeah, it's a setback and an embarrassment for Obama and all that, but it's not my fault his vetting staff can't do a better job than John "It's a Google" McCain's.  I know I'm supposed to be disappointed the Republicans got this great big win, but I'm just not feeling it.

For one thing, Daschle made $2.1 million over the last two years as a not-quite-a-lobbyist "senior strategist" for a healthcare industry lobbying firm, plus another $320,000 directly from the industry itself.  He would have been navigating a conflict-of-interest minefield which would either destroy his credibility or force him to recuse himself right out of the ballgame.

For another, Daschle is the walking embodiment of the Democrats' Culture Of Fail.  The Incredible Folding Man who helped facilitate Shock & Awe was supposed to be the go-to guy to push something the GOP sees as an existential threat?  Daschle's connections and schmoozing skills may be superb, but he's the last guy I'd pick for a fight.

I was a little worried when the Republicans started making noncommittal, judgment-reserving noises about Daschle's tax problem rather than going insincerely ballistic like they did on Holder and Geithner.  I thought maybe they realized that a folding milquetoast who made millions from the healthcare industry would be the perfect opponent, but in the end they just couldn't control themselves.

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Geithner Becomes Treasury Secretary
Posted by Ian Welsh, Firedoglake on January 26, 2009 at 4:19 PM.

The Senate has passed Timothy Geithner through as Treasury secretary. I'm sure he will do as good a job for Barack Obama as he did for George W. Bush, [Fed Chairman Ben] Bernanke and [ex-Treasury Secretary Henry] Paulson.

Update: Four Democrats voted against it:

Sen. Robert Byrd, West Virginia
Sen. Tom Harkin, Iowa
Sen. Russ Feingold, Wisconsin
Sen. Bernie Sanders, Vermont (well, he's sort of a Dem)

I imagine Feingold's and Sanders' reasons were much the same as why I can't get very enthused for Geithner.

Hillary Clinton Confirmed As Secretary Of State
Posted by Ian Welsh, Firedoglake on January 21, 2009 at 2:51 PM.

I would have preferred her for a domestic slot like health, but it's still amusing to see Clinton confirmed with only 2 votes against (Vitter and Demint), if only to keep janitors employed cleaning up after wingnut head explosions for the duration of her stay at Foggy Bottom.  (Hey it's nasty work, but it's work).

Clinton's got a lot of name recognition and is generally (but not universally) liked overseas.  Her husband is, likewise, still very popular.  Added to the goodwill Obama starts with, I hope she'll be able to do some good in repairing America's damaged reputation, and the source of that damaged reputation, America's foreign policy.

What a Better Stimulus Bill Would Look Like
Posted by Ian Welsh, Firedoglake on January 7, 2009 at 4:18 AM.

What could Obama have proposed instead of tax cuts?  Some very quick examples:

Example: if you want houses refit to be energy efficient, say that Freddie and Fannie will refinance (not rewrite, refi, then it doesn't matter who owns them) mortgages to reduce the payment amounts by the value of the refit plus some, the government will make up the difference.  Specify exactly what is required to get the improved mortgage rates, and have inspectors check the work, even offer some upfront credit to get the job done. (You can easily dump in hundreds of billions into this.  It also allows you to backdoor refi a lot of houses - you can refi at current mortgage rates sort of no matter what, so once people do it they'll get a huge savings if they were in a bad mortgage).

Example: for new buildings, if they meet specified energy requirements, give them a 1% lower mortgage rate.  If they are net energy producers, give them a 2% lower interest rather than otherwise.  The government pays the difference.

Example: offer a rebate for people to buy cars that are fuel efficient beyond a certain level.

Example: do a car buy back of the worst 10% polluting/fuel inefficient cars.

Example: give public transit authorities a 10% budget increase with a mandate to increase service.

Example: California doesn't have enough fire fighters.  Offer to pay to increase the size of the fire fighting corps by 50%.

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The Attacks on Gaza: Orwell in Israel
Posted by Ian Welsh, Firedoglake on December 27, 2008 at 2:17 PM.

This beauty from Tzipi Livni is completely Orwellian:

The government ordered the strikes on Hamas only after it saw no other way to stop rocket attacks on its southern towns, she said.

I can imagine no scenario under which bombing Hamas will stop rocket attacks. In particular, these attacks were aimed at the security forces, killing the police chief and the security chief and 140 Hamas security forces.

Now, who do you think enforced the truce? Who is it that Hamas uses to make sure rockets only get launched when Hamas wants them to? That would be ... the police and the security forces.

Bombing Hamas is not going to stop the attacks, if anything it will increase them. But Israel has degraded Hamas' ability to control the various folks who launch the missiles (many of whom are not Hamas).

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Riots Spread in Europe: How Long Till They Break Out in the U.S.?
Posted by Ian Welsh, Firedoglake on December 12, 2008 at 11:00 AM.

Looks like the Greek riots have been contagious:

Protesters in Spain, Denmark and Italy smashed shop windows, pelted police with bottles and attacked banks this week, while in France, cars were set ablaze Thursday outside the Greek consulate in Bordeaux, where protesters scrawled graffiti warning about a looming "insurrection."...

...More demonstrations were set for Friday in Italy, France and Germany.

Still, the clashes have been isolated so far, and nothing like the scope of the chaos in Greece, which was triggered by the police killing of a teenager on Saturday and has ballooned into nightly scenes of burning street barricades, looted stores and overturned cars.

Here's the question. When will Americans decide they've had enough and start rioting?

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How Fumbling the Bailout Led to the Chicago Sit In
Posted by Ian Welsh, Firedoglake on December 8, 2008 at 9:59 AM.

Over the last couple months I've warned that one main reason banks aren't lending, and are cutting off credit lines to businesses and individuals, is because they are hoarding money in order to buy competitors. In the Chicago factory sit in, the key moment which caused Republic Windows to shut down was when Bank of America cut off their line of credit, which they did just before they approved a $50 billion takeover of Merrill Lynch.

Bank of America has bought out LaSalle Bank and Countrywide, and bank shareholders just approved a $50 billion buyout of Merrill Lynch. B of A has recently settled the largest suit against Countrywide.

Meanwhile, according to a source familiar with the nature of the bank's finances, Bank of America has issued $9 billion of secured debt insured by the FDIC. Yet, as with almost all banks, it has been tightening its credit to businesses and consumers.

A lot of banks still have plenty of money. Bank of America has plenty of money. The amount of money required to keep Republic Windows open is trivial to them -- $10 million, perhaps.

But right now, they as with other banks, are keeping their powder dry. Money loaned out can't be used to buy up competitors at cents on the dollar.

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India's Wondering, 'If the U.S. Can Bomb Pakistan, Why Can't We?'
Posted by Ian Welsh, Firedoglake on December 2, 2008 at 9:49 AM.

Looks like the Indian press wants the same rights to bomb other countries the US has been claiming, and they're trying to use Obama's words to justify it:

Sovereign nations have the right to protect themselves, US president-elect Barack Obama said on Monday, when asked if India could follow the same policy he advocated during his election campaign — of bombing terrorist camps in Pakistan if there was actionable evidence and Islamabad refused to act on it. 

The Times goes on to note that Obama carefully caveated his remarks, noting that India should only act unilaterally if the association is proved beyond a doubt and if Pakistan doesn't deal with it themselves.

Nonetheless, this is a particularly ominous development.  US bombing and incursions into Pakistan are already destabilizing the country, and the Pakistani military and intelligence services have become unreliable instruments, using them to crack down on Pakistanis at the behest of outsiders has caused a great deal of dissent.

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Bush's Gates Will Stay as Obama's Defense Secretary: Looks Like More War in Afghanistan
Posted by Ian Welsh, Firedoglake on November 25, 2008 at 4:56 PM.

Gates is staying on as Defense Secretary. What this means is simple enough, a continued draw down in Iraq and a surge (tm) in Afghanistan. Gates was, in effect, Bush Senior's man at Defense, cleaning up another one of Junior's messes. This also raises the question of whether generals who have gotten too big for their jobs, are going to be reigned in as they should be. Petraeus has been acting as proconsul, doing high level diplomacy and effectively running US foreign policy in a big chunk of the world. This was a function of Bush's weakness, his need of someone popular to carry his corpse around, as well Condi's complete sidelining from serious decision making. Irrespective of one's views on Petraeus's competence and integrity, however, it's not a healthy situation, and the Obama administration should take back the roles which don't belong to any general.Gates seems unlikely to be the man to do that, but it's hard to imagine Clinton, for example, allowing anyone to usurp her prerogatives, so we shall see how it plays out.

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Econ-ocalypse: Dow Drops Below 7,600, No Deal Reached on Auto Bailout
Posted by Ian Welsh, Firedoglake on November 20, 2008 at 2:52 PM.

Well, the Dow has broken 8,000.  As Jane noted there is no technical support below 8K, so where it ends now is not known.  A historical low for a bear market, as I've written in the past is 6K, which is about 7 times earnings. 

The issue isn't just technical trading, it's the spiral of margin calls, where the lower the market goes, the more investors who have borrowed funds to invest have to sell in order to keep enough value in their accounts to cover the loans they've taken out.  The term for this is an Ohmstead break, and if one occurs, the drop will become uncontrollable.

In the meantime, I am amused that the same White House and Senate who supposedly passed the bailout bill to save the market wasn't willing to push cough 25 billion to stop this meltdown from occuring.  When the White House and Congress failed to pass a restructuring bill, investors got scared, because even if politicians are stupid enough to be stampeded by Paulson, then too stupid to understand what 3 million job losses will do the US economy, investors know that it would devastate the economy.

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Now Is No Time to Sing Kumbaya: We Must Hold the Bush Regime Accountable
Posted by Ian Welsh, Firedoglake on November 14, 2008 at 7:34 AM.

So, I'm hearing a ton of arguments that we should all just let bygones be bygones, because gosh darn, there are so much more important things to do than bringing Bush apparatchiks who smashed the constitution to bits, invaded another country based on lies (a war crime that Nazis were hung for) and who were criminally incompetent in their management of the economy, Katrina and everything else, to account.

Yes, we should all be BIGGER than justice, and just let bygones be bygones. What could be the harm in just saying "hey it's over now, let's fix the problems these criminal saps made and not bother to go after them." (I'm sure rapists and murderers who have killed and harmed far fewer people are wondering why this standard doesn't apply to them.)

The SAME people who were responsible for Nixon's crimes, were responsible for Iran/Contra. They and their proteges came back and were responsible for Bush, Iraq, torture, screwing up Katrina and so on.

But we're supposed to let bygones be bygones so they can do it again in the next Republican administration.

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Why Won't the Federal Reserve Say Who They Gave $2 Trillion To?
Posted by Ian Welsh, Firedoglake on November 11, 2008 at 5:06 AM.

Apparently Bernanke, that wonderful bipartisan soul who is so competent and wonderful that everyone in the village thinks Obama should leave him in charge is refusing to identify who got almost 2 trillion dollars of Fed cash. Bloomberg News is suing to find out. Personally I really, really, really want to know. What exactly is Bernanke hiding? Who got the money he doesn't want us to know got the money?

This is money that was loaned in exchange for "collateral", by which we mean "trash no one else but the Fed would buy for anything but cents on the dollar." Barney Frank, embarrassing himself yet again, claims the Fed should keep its clap shut because if people know how bad it is, well, there might be a run. I think Barney's missing the point, as long as people don't know how bad it is, they won't trust anyone who might be borrowing large amounts of money from the Fed with crap collateral, because they don't know how bad it is and they suspect it's really really really bad. As in 10 cents on the dollar bad.

More to the point, that 2 trillion is taxpayer money, and taxpayers have a right to know what sweetheart deals Bernanke's been giving out, and who's been getting what. This whole "this information is too scary for citizens to know" schtick is so Bush regime. I thought we were moving into a new era of openness? Perhaps Barney should get with the program?

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Neo-Nazis' Plan to Assassinate Obama Disrupted
Posted by Ian Welsh, Firedoglake on October 27, 2008 at 2:58 PM.

As Dave Neiwart notes, hopefully this US attorney has the integrity to prosecute it properly. These skinheads were plenty ambitious:

Federal agents have broken up a plot to assassinate Democratic presidential candidate Barack Obama and shoot or decapitate 102 black people in a Tennessee murder spree, the ATF said Monday ...


... the two men planned to shoot 88 black people and decapitate another 14. The numbers 88 and 14 are symbolic in the white supremacist community.


The men also sought to go on a national killing spree, with Obama as its final target, Cavanaugh told The Associated Press.


"They said that would be their last, final act - that they would attempt to kill Sen. Obama," Cavanaugh said. "They didn't believe they would be able to do it, but that they would get killed trying."