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“Self Declared Spokesman For Blacks”: Why Did Bernie Sanders Put An Obama-Hater On The Democratic Platform Committee?

The liberal case against Hillary Clinton rests in large part upon her associations — people she surrounds herself with and whose judgment she relies upon. She has caught an enormous amount of flak, some of it fair, for her ties to figures in the finance industry or advisers with morally questionable worldviews. By the same token, what should we make of Bernie Sanders’s decision to appoint Cornel West as one of his advisers to the Democratic Party’s platform committee?

West, of course, has socialist views largely in line with Sanders’s own. But West also has a particular critique of the sitting Democratic president that goes well beyond Sanders’s expressions of disappointment. West’s position is not merely that Obama has not gone far enough, but that he has made life worse for African-Americans:

On the empirical or lived level of Black experience, Black people have suffered more in this age than in the recent past. Empirical indices of infant mortality rates, mass incarceration rates, mass unemployment and dramatic declines in household wealth reveal this sad reality. How do we account for this irony? It goes far beyond the individual figure of President Obama himself, though he is complicit; he is a symptom, not a primary cause. Although he is a symbol for some of either a postracial condition or incredible Black progress, his presidency conceals the escalating levels of social misery in poor and Black America.

This is actually not empirical. African-American infant mortality has declined, not increased, during Obama’s presidency:

The African-American unemployment rate has fallen to its lowest level since 2008. The African-American uninsured rate has fallen by more than half, and the administration has undertaken a wide range of liberalizing reforms to the criminal-justice system. The notion that Obama has made life worse for African-Americans rests entirely on affixing the blame for the 2008 economic collapse on him, without giving him any credit for the wide-ranging measures to alleviate it, or the recovery that has ensued. This is, in other words, the Republican Party’s method of measuring Obama’s record, and it’s the sort of grossly unfair cherry-picking that no good faith critic would use.

West does not merely lament the alleged worsening of conditions for African-Americans that he claims Obama has caused. He has a theory for it:

“I think my dear brother Barack Obama has a certain fear of free black men,” West says. “It’s understandable. As a young brother who grows up in a white context, brilliant African father, he’s always had to fear being a white man with black skin. All he has known culturally is white. He is just as human as I am, but that is his cultural formation. When he meets an independent black brother, it is frightening. And that’s true for a white brother. When you get a white brother who meets a free, independent black man, they got to be mature to really embrace fully what the brother is saying to them. It’s a tension, given the history. It can be overcome. Obama, coming out of Kansas influence, white, loving grandparents, coming out of Hawaii and Indonesia, when he meets these independent black folk who have a history of slavery, Jim Crow, Jane Crow and so on, he is very apprehensive. He has a certain rootlessness, a deracination. It is understandable.

“He feels most comfortable with upper middle-class white and Jewish men who consider themselves very smart, very savvy and very effective in getting what they want.”

West’s theory is essentially the mirror image of the notion, peddled by Dinesh D’Souza and Newt Gingrich, that Obama absorbed a racial ideology from one of his parents. For Obama’s unhinged right-wing critics, that parent is his father. For West, it is his mother. The racial biases he inherited allegedly define his worldview and turn him into a tool of racial bias — for black people, in the right-wing version, and against them, in West’s. Then you have West’s dismay at Obama’s excessive comfort with wealthy Jews, which he portrays as the result more than the cause of Obama’s lack of interest in helping African-Americans.

The Sanders revolution means that, rather than a full-throated celebration of Obama’s record akin to the treatment Ronald Reagan received at the 1988 Republican convention, the party’s message will include the perspective of one of the president’s avowed haters. Of course, Sanders himself has not said these things, and perhaps he is rewarding West for his campaign service. But if you are celebrating the changes Sanders is bringing about to the Democratic Party, you are celebrating the replacement of one cohort of advisers and activists with another. Sanders’s revolution means giving West’s views more legitimacy and influence in Democratic politics.

 

By: Jonathan Chait, Daily Intelligencer, New York Magazine, May 24, 2016

May 30, 2016 Posted by | African Americans, Bernie Sanders, Financial Crisis | , , , , , , , , | Leave a comment

“Crime Does Pay”: U.S. Appeals Court Throws Out Fraud Charges Against Bank of America

Yesterday the 2nd U.S. Circuit Court of Appeals in New York demonstrated why prosecuting banks for committing fraud in the lead-up to the Great Recession is such a difficult proposition. Here’s the background on one of the biggest government enforcement cases to go to trial in connection with the U.S. housing meltdown and financial crisis.:

A federal jury had in 2013 found Bank of America and Rebecca Mairone, a former midlevel Countrywide executive, liable for fraudulently selling shoddy loans originated through its “High Speed Swim Lane” program, also called HSSL or “Hustle.”…

Following the verdict, U.S. District Judge Jed Rakoff in 2014 imposed a $1.27 billion penalty on Bank of America and ordered Mairone to pay $1 million.

That decision was appealed and a ruling issued yesterday.

The 2nd U.S. Circuit Court of Appeals in New York found insufficient proof under federal fraud statutes to establish Bank of America’s liability over a mortgage program called “Hustle” run by the former Countrywide Financial Corp…

In a 3-0 decision, U.S. Circuit Judge Richard Wesley said the evidence at most showed that Countrywide breached contracts to sell investment-quality loans, and that there was no proof it intended any deception.

“The trial evidence fails to demonstrate the contemporaneous fraudulent intent necessary to prove a scheme to defraud through contractual promises,” Wesley wrote.

This has always been the challenge. In order to prosecute banks and/or individuals, the most likely charge is that they committed fraud. But federal statutes require proof of intent in order to find a business or person guilty of fraud. In other words, the prosecution not only has to prove that the defendant committed fraud – but that they intended to do so. The dismissal of this case demonstrates what a high hurdle that can be.

We often hear about the “meager” financial settlements the Justice Department negotiated in similar cases. It’s worth noting that in this instance, Bank of America and Rebecca Mairone got away with having to pay nothing.

 

By: Nancy LeTourneau, Political Animal Blog, The Washington Monthly, May 24, 2016

May 25, 2016 Posted by | Bank Of America, Big Banks, Financial Crisis | , , , , , | Leave a comment

“Who Says Crime Doesn’t Pay?”: The Bottom Line Is Crime Can Actually Pay — If It’s Big Enough

Hey, can we all just stop complaining that our government coddles Wall Street’s big money-grubbing banks?

Sure, they went belly-up and crashed our economy with their frauds, rigged casino games, and raw greed. And, yes, the Bush and Obama regimes rushed to bail them out with trillions of dollars in our public funds, while ignoring the plight of workaday people who lost jobs, homes, businesses, wealth, and hope. But come on, Buckos, have you not noticed that the feds are now socking the bankers with huuuuuge penalties for their wrongdoings?

Wall Street powerhouse Goldman Sachs, for example, was recently punched in its corporate gut with a jaw-dropping $5 billion for its illegal schemes.

Wow, $5 billion! That’s a stunning amount that Goldman Sachs has agreed to pay to settle federal criminal charges over its shameful financial scams that helped wreck America’s economy in 2008. That’s a lot of gold, even for Goldman Sachs. It’s hard to comprehend that much money, so think of it like this: If you paid out $100,000 a day, every day for 28 years, you’d pay off just one billion dollars. So, wow, imagine having to pull Five Big B’s out of your wallet! That’s enough to make even the most arrogant and avaricious high-finance flim-flammer think twice before risking such scams, right? Thus, these negotiated settlements between the Justice Department and the big banks will effectively deter repeats of the 2008 Wall Street debacle… right?

Actually, no.

The chieftains of the Wall Street powerhouse say they are “pleased” to swallow this sour slug of medicine. It’s not because they’re contrite and eager to make amends.  Wall Street bankers don’t do contrite. They are pleased (even thrilled) because this little insider secret: Thanks to Goldman’s backroom dealing with prosecutors, the settlement is riddled with special loopholes that could eliminate nearly $2 billion from the publicized “punishment.”

For example, the deal calls for the felonious bank to put a quarter-billion dollars into affordable housing, but generous federal negotiators put incentives and credits in the fine print that will let Goldman escape with paying out less than a third of that. Also, about $2.5 billion of the settlement is to be paid to consumers hurt by the financial crisis. But the deal lets the bank deduct almost a billion of this payout from its corporate taxes — meaning you and I will subsidize Goldman’s payment. As a bank reform advocate puts it, the problem with these settlements “is that they are carefully crafted more to conceal than to reveal to the American public what really happened here.”

Also, notice that the $5 billion punishment is applied to Goldman Sachs, not the “Goldman Sackers.” The bank’s shareholders have to cough up the penalty, rather than the executives who did the bad deeds. Goldman Sachs’ CEO, Lloyd Blankfein, just awarded himself a $23 million paycheck for his work last year. That work essentially amounted to negotiating the deal with the government that makes shareholders pay for the bankers’ wrongdoings — while he and other top executives keep their jobs and pocket millions. Remember, banks don’t commit crimes — bankers do.

One more reason Wall Street bankers privately wink and grin at these seemingly huge punishments is that even paying the full $5 billion would only be relatively painful. To you and me, that sounds like a crushing number — but Goldman Sachs raked in $33 billion in revenue last year, so it’s a reasonable cost of doing business. After all, Goldman sold tens of billions of dollars in the fraudulent investment packages leading to the settlement, so the bottom line is that crime can actually pay — if it’s big enough.

 

By: Jim Hightower, Featured Post, The National Memo, May 4, 2016

May 5, 2016 Posted by | Big Banks, Corporate Crime, Financial Crisis, Wall Street | , , , , , , , | Leave a comment

“Austerity’s Grim Legacy”: Deficit Fetishism Was Both Wrongheaded And Destructive

When economic crisis struck in 2008, policy makers by and large did the right thing. The Federal Reserve and other central banks realized that supporting the financial system took priority over conventional notions of monetary prudence. The Obama administration and its counterparts realized that in a slumping economy budget deficits were helpful, not harmful. And the money-printing and borrowing worked: A repeat of the Great Depression, which seemed all too possible at the time, was avoided.

Then it all went wrong. And the consequences of the wrong turn we took look worse now than the harshest critics of conventional wisdom ever imagined.

For those who don’t remember (it’s hard to believe how long this has gone on): In 2010, more or less suddenly, the policy elite on both sides of the Atlantic decided to stop worrying about unemployment and start worrying about budget deficits instead.

Some of us tried in vain to point out that deficit fetishism was both wrongheaded and destructive, that there was no good evidence that government debt was a problem for major economies, while there was plenty of evidence that cutting spending in a depressed economy would deepen the depression.

And we were vindicated by events. More than four and a half years have passed since Alan Simpson and Erskine Bowles warned of a fiscal crisis within two years; U.S. borrowing costs remain at historic lows. Meanwhile, the austerity policies that were put into place in 2010 and after had exactly the depressing effects textbook economics predicted; the confidence fairy never did put in an appearance.

Yet there’s growing evidence that we critics actually underestimated just how destructive the turn to austerity would be. Specifically, it now looks as if austerity policies didn’t just impose short-term losses of jobs and output, but they also crippled long-run growth.

The idea that policies that depress the economy in the short run also inflict lasting damage is generally referred to as “hysteresis.” It’s an idea with an impressive pedigree: The case for hysteresis was made in a well-known 1986 paper by Olivier Blanchard, who later became the chief economist at the International Monetary Fund, and Lawrence Summers, who served as a top official in both the Clinton and the Obama administrations. But I think everyone was hesitant to apply the idea to the Great Recession, for fear of seeming excessively alarmist.

At this point, however, the evidence practically screams hysteresis. Even countries that seem to have largely recovered from the crisis, like the United States, are far poorer than precrisis projections suggested they would be at this point. And a new paper by Mr. Summers and Antonio Fatás, in addition to supporting other economists’ conclusion that the crisis seems to have done enormous long-run damage, shows that the downgrading of nations’ long-run prospects is strongly correlated with the amount of austerity they imposed.

What this suggests is that the turn to austerity had truly catastrophic effects, going far beyond the jobs and income lost in the first few years. In fact, the long-run damage suggested by the Fatás-Summers estimates is easily big enough to make austerity a self-defeating policy even in purely fiscal terms: Governments that slashed spending in the face of depression hurt their economies, and hence their future tax receipts, so much that even their debt will end up higher than it would have been without the cuts.

And the bitter irony of the story is that this catastrophic policy was undertaken in the name of long-run responsibility, that those who protested against the wrong turn were dismissed as feckless.

There are a few obvious lessons from this debacle. “All the important people say so” is not, it turns out, a good way to decide on policy; groupthink is no substitute for clear analysis. Also, calling for sacrifice (by other people, of course) doesn’t mean you’re tough-minded.

But will these lessons sink in? Past economic troubles, like the stagflation of the 1970s, led to widespread reconsideration of economic orthodoxy. But one striking aspect of the past few years has been how few people are willing to admit having been wrong about anything. It seems all too possible that the Very Serious People who cheered on disastrous policies will learn nothing from the experience. And that is, in its own way, as scary as the economic outlook.

 

By: Paul Krugman, Op-Ed Columist, The New York Times, November 6, 2015

November 9, 2015 Posted by | Austerity, Economic Recovery, Financial Crisis | , , , , , , , , , | 3 Comments

“After Six Full Years Of Being Wrong About Everything”: Crash-Test Dummies As Republican Candidates For President

Will China’s stock crash trigger another global financial crisis? Probably not. Still, the big market swings of the past week have been a reminder that the next president may well have to deal with some of the same problems that faced George W. Bush and Barack Obama. Financial instability abides.

So this is a test: How would the men and women who would be president respond if crisis struck on their watch?

And the answer, on the Republican side at least, seems to be: with bluster and China-bashing. Nowhere is there a hint that any of the G.O.P. candidates understand the problem, or the steps that might be needed if the world economy hits another pothole.

Take, for example, Scott Walker, the governor of Wisconsin. Mr. Walker was supposed to be a formidable contender, part of his party’s “deep bench” of current or former governors who know how to get things done. So what was his suggestion to President Obama? Why, cancel the planned visit to America by Xi Jinping, China’s leader. That would fix things!

Then there’s Donald Trump, who likes to take an occasional break from his anti-immigrant diatribes to complain that China is taking advantage of America’s weak leadership. You might think that a swooning Chinese economy would fit awkwardly into that worldview. But no, he simply declared that U.S. markets seem troubled because Mr. Obama has let China “dictate the agenda.” What does that mean? I haven’t a clue — but neither does he.

By the way, five years ago there were real reasons to complain about China’s undervalued currency. But Chinese inflation and the rise of new competitors have largely eliminated that problem.

Back to the deep bench: Chris Christie, another governor who not long ago was touted as the next big thing, was more comprehensible. According to Mr. Christie, the reason U.S. markets were roiled by events in China was U.S. budget deficits, which he claims have put us in debt to the Chinese and hence made us vulnerable to their troubles. That almost rises to the level of a coherent economic story.

Did the U.S. market plunge because Chinese investors were cutting off credit? Well, no. If our debt to China were the problem, we would have seen U.S. interest rates spiking as China crashed. Instead, interest rates fell.

But there’s a slight excuse for Mr. Christie’s embrace of this particular fantasy: scare stories involving Chinese ownership of U.S. debt have been a Republican staple for years. They were, in particular, a favorite of Mitt Romney’s campaign in 2012.

And you can see why. “Obama is endangering America by borrowing from China” is a perfect political line, playing into deficit fetishism, xenophobia and the perennial claim that Democrats don’t stand up for America! America! America! It’s also complete nonsense, but that doesn’t seem to matter.

In fact, talking nonsense about economic crises is essentially a job requirement for anyone hoping to get the Republican presidential nomination.

To understand why, you need to go back to the politics of 2009, when the new Obama administration was trying to cope with the most terrifying crisis since the 1930s. The outgoing Bush administration had already engineered a bank bailout, but the Obama team reinforced this effort with a temporary program of deficit spending, while the Federal Reserve sought to bolster the economy by buying lots of assets.

And Republicans, across the board, predicted disaster. Deficit spending, they insisted, would cause soaring interest rates and bankruptcy; the Fed’s efforts would “debase the dollar” and produce runaway inflation.

None of it happened. Interest rates stayed very low, as did inflation. But the G.O.P. never acknowledged, after six full years of being wrong about everything, that the bad things it predicted failed to take place, or showed any willingness to rethink the doctrines that led to those bad predictions. Instead, the party’s leading figures kept talking, year after year, as if the disasters they had predicted were actually happening.

Now we’ve had a reminder that something like that last crisis could happen again — which means that we might need a repeat of the policies that helped limit the damage last time. But no Republican dares suggest such a thing.

Instead, even the supposedly sensible candidates call for destructive policies. Thus John Kasich is being portrayed as a different kind of Republican because as governor he approved Medicaid expansion in Ohio, but his signature initiative is a call for a balanced-budget amendment, which would cripple policy in a crisis.

The point is that one side of the political aisle has been utterly determined to learn nothing from the economic experiences of recent years. If one of these candidates ends up in the hot seat the next time crisis strikes, we should be very, very afraid.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, August 28, 2015

August 29, 2015 Posted by | China, Financial Crisis, Global Economy | , , , , , , , | 3 Comments

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