We're #1 ..........in low wage jobs!

The United States used to pride itself on having the world's largest middle class.

Following World War II inequality declined and the blue collar middle class grew. Economists call this period the Great Compression. It was a product of the New Deal,  labor and financial regulations, widespread unionization, and social investments in education, science, research and development and the infrastructure.

More than forty years of attacks on unions, deregulation, financial liberalization and privatization have undermined  the middle class and the nation's shared prosperity. Inequality has soared to heights not seen since the Gilded Age. Upward mobility, once a hallmark of the America promise, is less likely than in other industrial democracies.  The United States increasingly resembles a banana republic.

The nation's business class has waged a one sided class war against the unions, wages and benefits of private sector workers since the 1970's. Now they and their political spokeman like Scott Walker have turned their fire on firefighters, teachers and other public servants. Business Week put it bluntly in 1974 when it declared: "Some people will obviously have to do with less...it will be a bitter pill for many to swallow the idea of doing with less so that big business can have more."

But are we are still number one ................in low wage jobs. Is this the America we want to leave our children and grandchildren?

Robert Rubin Should Be Doing Hard Labor: Instead He's Trying to Resurrect Himself

Dean Baker, an economist who in 2002 warned that a dangerous housing bubble was developing, writes:

As Treasury Secretary, Robert Rubin put in place all the pieces that set up the economy for the disaster that we are now living through. He pushed legislation that weakened regulation of the financial sector; he cheered on a stock bubble that eventually grew to $10 trillion and he established an over-valued dollar as a matter of official policy.

He then left to take a top job at Citigroup where he was able to enjoy the fruits of his labor. He earned well over $100 million in the decade after he left the Clinton administration. In the fall of 2008, when Citigroup was saved from bankruptcy with a taxpayer bailout, Rubin quietly slipped out the back door (with his money), resigning from his position at Citigroup.

It may not seem just that someone like Rubin would be allowed to live out his life in luxury after the policies that he promoted and personally profited from led to so much suffering for so many people. But that is the way things work in the United States these days.

However, what is even more infuriating is that he doesn't seem to have any intention of going away. He is still pontificating on the economy and desperately trying to rewrite history to exonerate himself.

The column is linked.

Deregulation creates class of homeless workers

For more than three decades free market fundamentalists have criticised labor market regulations as an impediment to global competition and free markets.

They have worked to undermine the social contract that helped rescue the United States from the Great Depression, win World War II and create stable growth and the world's first blue-collar middle class.

Developed countries like France, Germany and Sweden with significantly stronger labor laws and generous social safety nets than the U.S. have been lectured on the need to develop more flexible and nibble labor forces. The result: a decline in full time permanent employment, the rise of a subclass of contingent workers who receive lower pay and fewer benefits than full-time permanent employees, and growing social inequality.

Now that the U. S, economic downturn has dragged the world economy into a recession, millions of unemployed workers are experiencing the dark side of deregulation and labor market flexibility-unemployment and homelessness.

Under Japan's traditional company centered social welfare system, firms were expected to look after employees until retirement and beyond, providing pensions and other benefits and keeping unemployment down by not laying off workers.

The neo-liberal model has undermined the traditional guarantee of life-time employment for so-called salarymen and tens of thousands of factory workers laboring in the country's small factories. They have been replaced by a contingent labor force, a subclass of Japanese workers, employed by staffing agencies or hired on short term contracts with lower wages and fewer benefits. These workers are not covered by legal protections against layoffs like regular full-time employees are.

Contingent workers now comprise over a third (34.5%) of the Japanese labor force. It is these workers, second class employees really, who are literally being thrown into the streets in response to the world's economic slowdown.

One hundred and twenty-five thousand (125,000) of the 131,000 Japanese workers who have been furloughed since October were nonregular, contingent workers according to the Japanese Labor Ministry.

According to the New York Times, these workers"...can expect little in the way of unemployment or welfare benefits." Japan simply does not have an adequate social safety net. Fully half of Japan's labor force is not even qualified for jobless benefits which were designed with lifetime employees, not contingent workers, in mind.

This is the dark side of deregulation-thousands of hard working people being literally throw into the streets as if they are used up machinery.

Next time you hear business leaders or economists promote labor market flexibility, ask them: how has flexibility helped Japan's new class of unemployed and homeless workers?

McCain's regulatory flip flop! I was against regulations before I was for them!

McCain defends deregulation of Wall Street!

In last night's debate, John McCain called for more regulation and oversight of Wall Street, despite the fact that he led the effort to pass many of the deregulatory reforms that led to the current crisis.

Interviewed on CBS only a few days before the debate, however, McCain said he did not“regret” championing the deregulation of Wall Street, that it was good for the economy:

Q: In 1999, you were one of the senators who helped pass deregulation of Wall Street. Do you regret that now?

McCAIN: No. I think the deregulation was probably helpful to the growth of our economy.

Watch it:

Obama responds to McCain on deregulation and healthcare

McCain wants health care deregulated

John McCain can't help himself.

Not only did he say that the economy was fundamentally sound just as Wall Street was unraveling, But he also thinks that health care reform should be modeled after the deregulated and collapsing financial sector.

Here is exactly what he wrote in Better Health Care at Lower Cost for Every American, in the Sept./Oct. issue of Contingencies, the magazine of the American Academy of Actuaries magazine:

Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.

McCain is a serial deregulator!

And Barack Obama's response:

Feds need to bail out states and economy!

Now that the Fed has bailed out one of the nation's most aggressive and reckless investment firms, Bear Stearns, President Bush and his economic advisers should turn their attention to helping the states and the American people.

At least 25 states are expecting budget shortfalls for the 2009 fiscal year. It is the largest number since 2002, when in the aftermath of the 2001 recession 37 states were forced to cut their budgets.

Many of these states owe their problems to stark declines in tax revenues after an implosion in housing markets. California is looking to fill a $14.5 billion hole for its next fiscal year, and Arizona’s $1.8 billion budget gap is 16 percent of its general fund, the largest percentage in the nation.

Wisconsin's deficit now stands at more than half a billion dollars ($527 million).

If the states cut their spending, government demand for goods and services will decrease , exacerbating the recession at the very time that fiscal stimulus policies are needed.

States, unlike the federal government which is allowed to engage in deficit spending, are required to balance their budgets. As a result, most states are cutting spending, particularly in education, as revenues decline.

According to the New York Times:"... eight states are cutting into the budgets for higher education, and nine states are cutting into their financing for primary and secondary education.

Delaware will not finance new school construction, and in Arizona, where school enrollment continues to explode, the Legislature, which wants to continue to pay cash to build schools, is fighting the governor, who would prefer to borrow for that construction in light of the state’s woes...

To help close a $600 million budget gap in Virginia, the state made hundreds of thousands of dollars in cuts at universities, including dorm cleaning staff, library budgets and graduate assistantships...

In California, Gov. Arnold Schwarzenegger’s proposed budget for 2008-9 includes a $4.4 billion cut in public education, the largest ever considered in the state. School districts, preparing for next year’s budgets, are already contemplating cuts to their staff. In the Alameda school district in Northern California, trustees voted to reduce the $83.7 million budget by cutting $200,000 to the sports programs, eliminating music programs for all children below fourth grade and increasing class sizes in ninth grade to an average of 29 students, up from 20.

If it appropriate for the federal government to lend hundreds of billions to banks and unregulated investment firms that financed a mountain of risky mortgages now headed toward default, then it is reasonable to assist states that are struggling under the weight of the mortgage meltdown and the financial crisis that followed.

The Bush administration and federal regulators are largely to blame for this mess because they turned a blind eye to reckless lending and investing. Their commitment to deregulation fostered the housing bubble, putting people in homes they couldn't afford and allowing financial speculators to mask the risk by slicing and dicing loans to the point that they could no longer keep track of them.

Officials, like Alan Greenspan, whose job it is to oversee these types of excesses, sat quietly by as the bubble inflated, or blew air into it by encouraging "innovative" lending schemes.

Now that the President and federal policy makers admit that the economy is in deep trouble, they have a responsibility to help the states cope with the fall-out by providing them with the revenue they need to balance their budgets without cutting education or other necessary funding.

A failure to assist the states will cause increased suffering and deepen the recession.

U.S shadow banking system faces 21st Century version of 1930's bank runs

Paul Krugman explains in layman's terms the causes of the nation's financial crisis, the worst since the Great Depression, and suggests why it has not become a Presidential campaign issue:

America came out of the Great Depression with a pretty effective financial safety net, based on a fundamental quid pro quo: the government stood ready to rescue banks if they got in trouble, but only on the condition that those banks accept regulation of the risks they were allowed to take.

Over time, however, many of the roles traditionally filled by regulated banks were taken over by unregulated institutions — the “shadow banking system,” which relied on complex financial arrangements to bypass those safety regulations.

Now, the shadow banking system is facing the 21st-century equivalent of the wave of bank runs that swept America in the early 1930s. And the government is rushing in to help, with hundreds of billions from the Federal Reserve, and hundreds of billions more from government-sponsored institutions like Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

Given the risks to the economy if the financial system melts down, this rescue mission is justified. But you don’t have to be an economic radical, or even a vocal reformer like Representative Barney Frank, the chairman of the House Financial Services Committee, to see that what’s happening now is the quid without the quo.

Last week Robert Rubin, the former Treasury secretary, declared that Mr. Frank is right about the need for expanded regulation. Mr. Rubin put it clearly: If Wall Street companies can count on being rescued like banks, then they need to be regulated like banks.

But will that logic prevail politically?

Not if Mr. McCain makes it to the White House. His chief economic adviser is former Senator Phil Gramm, a fervent advocate of financial deregulation. In fact, I’d argue that aside from Alan Greenspan, nobody did as much as Mr. Gramm to make this crisis possible.

Both Democrats, by contrast, are running more or less populist campaigns. But at least so far, neither Democrat has made a clear commitment to financial reform.

Is that simply an omission? Or is it an ominous omen? Recent history offers reason to worry.

In retrospect, it’s clear that the Clinton administration went along too easily with moves to deregulate the financial industry. And it’s hard to avoid the suspicion that big contributions from Wall Street helped grease the rails.

Last year, there was no question at all about the way Wall Street’s financial contributions to the new Democratic majority in Congress helped preserve, at least for now, the tax loophole that lets hedge fund managers pay a lower tax rate than their secretaries.

Now, the securities and investment industry is pouring money into both Mr. Obama’s and Mrs. Clinton’s coffers. And these donors surely believe that they’re buying something in return.

Let’s hope they’re wrong.

The entire article is linked.

Ideology of deregulation at root of housing market collapse

Paul Krugman's newest column argues that the libertarian (free market) economic policies of Alan Greenspan and the Bush administration incubated predatory lending practices that have boomeranged into the collapse of the housing market, pushing the nation to the edge of a recession.

Krugman writes: "...during the bubble years, the mortgage industry lured millions of people into borrowing more than they could afford, and simultaneously duped investors into investing vast sums in risky assets wrongly labeled AAA. Reasonable estimates suggest that more than 10 million American families will end up owing more than their homes are worth, and investors will suffer $400 billion or more in losses.

So where were the regulators as one of the greatest financial disasters since the Great Depression unfolded? They were blinded by ideology.

'Fed shrugged as subprime crisis spread,' was the headline on a New York Times report on the failure of regulators to regulate. This may have been a discreet dig at Mr. Greenspan’s history as a disciple of Ayn Rand, the high priestess of unfettered capitalism known for her novel 'Atlas Shrugged.'

In a 1963 essay for Ms. Rand’s newsletter, Mr. Greenspan dismissed as a “collectivist” myth the idea that businessmen, left to their own devices, “would attempt to sell unsafe food and drugs, fraudulent securities, and shoddy buildings.” On the contrary, he declared, “it is in the self-interest of every businessman to have a reputation for honest dealings and a quality product.”

It’s no wonder, then, that he brushed off warnings about deceptive lending practices, including those of Edward M. Gramlich, a member of the Federal Reserve board. In Mr. Greenspan’s world, predatory lending — like attempts to sell consumers poison toys and tainted seafood — just doesn’t happen."

Darling & Ott demand more government regulation!

Are Wisconsin Republicans rethinking their commitment to private property rights and deregulation?

That’s what you might conclude from the Journal Sentinel’s report that Senator Alberta Darling (R-River Hills) and Representative James Ott (R-Mequon) are introducing legislation to regulate community based residential facilities (CBRF).

It seems some Mequon and River Hills residents are upset about plans to set up such a facility for up to 8 adults in their neighborhoods.

Their fear that CBRFs will generate too much traffic in gated communties of half million dollar mac mansions stretches the imagination. Folks who require assisted living generally don’t drive!

Unless there are regulations limiting family size to less than eight in these subdivisions this effort seems blatantly discriminatory!

There's simply no reason to assume that a community based residential facility with eight seniors will generate any more traffic than a family with five or six kids, three or four vehicles and the household help that is common in such neighborhoods!

And what about Darling and Ott's commitment to property rights. Evidently, even these most scared of Republican cows aren't so scared; even when the owner of the Mequon CBRF is a Mequon resident herself.

Darling and Ott, who generally genuflect to private property rights and hate all things government, particularly regulation, have decided that we need a new law to regulate such matters. When it comes to their backyard, Big Government is apparently A OK!