Monday, January 31, 2011

America's Debt Grows: Bernanke says"Great"

We seem to be the only country that keeps inflating our money supply when other nation's are paying down their debt.  This bothered me a lot, because Asian countries say that money from QE2(our attempt to inflate the economy by having the Fed buy treasuries) is causing inflation in their countries.

I dropped by to see Ben Bernanke the other day to talk to him about why he still wanted to buy treasuries when the world is facing runaway inflation.

“As you know, I’m an expert on the depression,” he said.

 “I heard that,” I said.  “But we are the only country that isn’t trying to bring down its deficit.  Other nation’s people don’t like it either, but it seems necessary that we do it too.”

“Have you read the material I’ve written on the depression?” Bernanke said.

“Some of it,” I said.

“Then I don’t understand why you’re asking me these questions,” he said.

“I don’t understand why we’re a debtor nation and aren’t doing anything about it?” I said.

“If I don’t keep buying Treasuries to inflate the money supply, the stock market might go down and we also might have a double dip,” he said.

“It sounds to me as if you don’t think the American people can put up with some pain now in order to avoid enormous pain later,” I said.

“Aren’t you an American?” he said.  “The bankers want to have larger paychecks.  Those on Wall Street want the market to keep going up.  People whose houses are underwater don’t want to pay back what they owe on their mortgages,” he said.  “The bankers and the people on Wall Street control this country and I’m not going to make them angry.”

“But one day, when we aren’t the world’s reserve currency, we’ll have to pay back all the people and countries we took money from.”

“Take a closer look at what I  wrote about the depression and you’ll understand,” he said, standing up and walking out of the room.

I realized as I walked around Washington that I'd read all about it, but this time I was in a depression of my own.  If only a country could take a Prozac.

Tuesday, January 25, 2011

The Great Gatsby and the Rich Today

“So we beat on, boats against the current, borne back ceaselessly into the past.”
Those words end the best novel written in 20th Century America, a novel that forever haunts you with all its implications.  The novel left obscure how Jay Gatz got to be Gatsby and where his money comes from. However, it introduces us to an emerging America and points out how the old, rich world of Tom and Daisy doesn't really value a symbol of the nouveau riche like Gatsby.

Things have changed a little in America. Upstarts get startup money and having an old family doesn’t mean anything. (When I was a child of a widow in America, living on social security checks, I would have traded being a Mayflower descendent for cash any day of the week) Now money and fame are all that matter.

We also no longer seem angry that laws passed under Clinton and little Bush (In China he’s called Xiao Bush) mean the people who live in the rich suburbs are going to be able to pass on all of their money to their offspring, while most Americans will die with nothing to pass on to their lower middle class children.

Now we know where these bankers and Wall Street Caesars come from. But they still go to the same rich place where Tom and Daisy lived.  When they help bring down the country they keep the money they arranged to be in their pay packets and option plans. The Republicans and New York’s senators still do their bidding. On Sutton Place, or in Beverly Hills, they use their money as a powerful tool to get what they want.

Our politicians (if this is possible) have become more corrupt and beholden to these rich people. I’m a capitalist American, whose ancestors fought in the Civil War and the Revolution, but I always expected my country to be a fair one and it no longer is. When the Supreme Court killed Mc Cain-Feingold I knew things were heading in the wrong way. (By the way I an Independent Voter, not tied to either party)

Under old inheritance laws the government took enough money so that others could, through pluck and luck, rise up the ladder through hard work and replace them. It’s not impossible now, but it’s harder every day.
Social mobility made this country great. For 28 years I taught at a University in the inner city, while living in a rich suburb in Los Angeles County. One day a society matron came up to me and said; “Rich, you talk to Black people…” Yes I did and do and suddenly I felt I was a link between two worlds. I also talk to electricians and plumbers when my toilet isn't clogged and my lights are on.. Are we being borne ceaselessly into the past? Did all the gains in social mobility from the 60s to the 90s mean nothing?

What will happen to the children of the 9.4 percent of our countrymen who are unemployed?

My mailman when I was a kid was in the first wave of Marines at Iwo Jima. He was a hero to me no matter what others might think about his social status.

I have faith in my country and in my countrymen. At some point  laws governing inheritance will seem so misguided  and be perceived as so unfair, that the people will demand a reinstatement of what I’ve always called “American values.” These values promote social mobility, reward hard, honest work, and allow our country to become a better place, generation after generation.

Saturday, January 22, 2011

Bank of America Screwing Americans to Improve Profits

I have been waiting for a middle of the road president since Bill Clinton ended his second term.  No matter how much the Republicans hated him, in the second half of his term Clinton was a moderate who reached the independents among the electorate.  I believe George Herbert Walker Bush was also a moderate president.
Barack Obama has become a very pragmatic President. He seems to be no longer beholden to the left wing of his party.  His pro business attitude has endeared him to voters that had stopped approving of him.  Some thought he wasn’t doing enough to solve our unemployment problem. They also didn’t like the left wing of his party running the show.
That is all very well and good, because moderates should be running our country and I approve of his decision to be the President of all of us.  However, we still have to be careful that big business doesn’t continue to control the country.  I believe Obama will watch that inequity in power on behalf all of us. The left wing will, of course, dislike him for not being Big Bill Haywood.  It will be like watching Tony Blair and old labor at the beginning of his years as prime minister.
Joe Nocera in the New York Times today wrote an article about what had happened at Bank of America when the Times published the story about a retiree who was being foreclosed on by the bank. Bank of America had foolishly taken over Countrywide with its millions of bad sub-prime loans. It made mistakes it wants to rectify by getting every pound of flesh from the American people.  A strong judge, Duane Hart, immediately looked at the case and earned the bank’s ire. Bank of America is losing a lot of money because their former chairman bought more than one subprime lender after the financial crisis was apparent.  They want to get their positive quarterly financial reports in the black by sticking it to this woman, who is retired, and a good citizen  They want to steamroll over others in her category.
The judge didn’t let that happen and now the woman will be able to pay her mortgage out of her retirement checks just the way BofA promised her before they sought foreclosure.  The judge made sure that a cynical financial operation, which made many stupid decisions, was not going to reverse its terrible quarterly reports on the backs of retirees.
There are flippers and outright crooks that need to have their mortgages foreclosed on, but Bank of America doesn’t seem to know the difference between decent, honorable people who were taken advantage by sleazy subprime lenders and those who tried to game the system. I believe they don’t want to try.
 (A lot of Americans made bad decisions by themselves and they will have to live with the consequences).
It probably was only a symbolic victory for anyone except the retired woman. Bank of America will probably forget this experience and keep covering its mistakes on the backs of good, but poor, Americans.
At one point in history, Frank Capra would have made a movie about this, but Americans have short memories, and, except for the 9.4 percent that are unemployed, will forget their country was brought down by Wall Street and the banks. The CEO’s are beginning to give themselves large bonuses again, because they think we’ve forgotten what they did to our country. Have we?
By the way, shouldn’t a company called Bank of America be trying to help Americans, as well as try to make a lot of money off them?

Tuesday, January 11, 2011

Cross-hairs and the Crazies

In Chinese the word sha in the first tone means kill.  Sha in the third tone means idiot. I’d like to use those words in connection with political rhetoric and the actions of disturbed human beings.

A man who seems as crazy as a loon shot a Congresswoman.  Before this happened Sarah Palin had put crosshairs on the Congresswoman's district in a map.  Sarah Palin uses this phrase “don’t retreat, reload” in her missives to the American people. The tea party members love her rhetoric, but most people don’t classify them as crazy.

We live in a country today in which 24 hour news channels fill all this time with anything they can find.  Fox news is right wing. Keith Olberman screams from the left. We’ve come a long way from Walter Cronkite’s 30 minutes a night.

 More and more on our television we see absurd people are given coverage.  There was  a lot spoken about a pastor who wanted to burn the Koran, even though he had only about 10 members in his congregation. Sarah Palin, like Iago, only communicates through Facebook and Twitter, unless you count her puff reality show where she takes Kate and eight on a disastrous trip through Alaska. Just like Iago, she makes outrageous comments to her followers and doesn’t have news conferences.

If she says something that sounds like sha in the first tone, someone who is sha in the third tone will get ideas.  Since father Coughlin on the radio in the 30s, we haven’t had such a popular figure that dispenses vitriol.  (Okay, Okay, Rush Limbaugh is another) Oliver Wendell Holmes once said “you can’t cry fire in a crowded theater.” In the same way you can’t put crosshairs on a human being and expect there to be no consequences.

Some days America is scary.  For some of my former students just getting from the project to the bus was a rite of passage.  The possession of guns runs rampant in our inner cities.  There are gun nuts everywhere. Even though polls show a majority of the American people want gun control, our legislators are so frightened of being targeted (appropriate word) by the NRA that it will be impossible to ever have gun control legislation.

Knowing that there are a large number of guns out there in America, people who aspire to national leadership need to watch what they say and do. This is not the America I grew up in.  This is a country full of powder kegs waiting to be set off by someone who says the most outrageous things. As a country we are Othello, with Iago in Alaska.