Sunday, March 21, 2010

The wildlife wipeout: Bitter winter takes its toll on birds and mammals

The coldest winter in more than 30 years has devastated wildlife, say experts.

Thousands of water birds such as herons and kingfishers are likely to have starved to death, unable to break through ice on ponds and streams to get food.

Tiny birds such as the wren and goldcrest will have frozen in the prolonged sub-zero temperatures.

The Losers

Small mammals such as the shrew and overwintering butterflies including the red admiral will also have been badly hit.

But the bitter weather will have been welcomed by some species. Hibernating mammals need the cold to stay asleep, and freezing temperatures help kill off parasites and diseases.

Today, however, is the first official day of spring and it marks an end to the coldest winter since 1979.

British Waterways, which looks after 2,200 miles of canals, said the cold winter had hit birds which feed from still or slow-moving water.

The Winners

Mark Robinson, who is asking the public to take part in the British Waterways annual wildlife survey, said much of nature was 'pretty resilient' to cold winters. But he warned that kingfishers and herons are likely to have suffered badly.

'It is therefore particularly important for us to monitor what species need our support.'

Grahame Madge, of the Royal Society for the Protection of Birds, said: 'It's worth remembering this was a return to the sort of winters that were common 30 years ago.

'All the species affected have lived though this kind of typical British winter for hundreds or thousands of years.'

Sightings can be recorded at wildlifesurvey.

Mass Unemployment and the Current Economic Crisis

Fake Forecasts, Misleading Statistics, Misguided Policies

On March 17 Congress passed the “Hire Now Tax Cut” giving companies a break from paying Social Security taxes for the remainder of the year on any new workers hired who have been unemployed for at least 60 days.

The legislation is a token response to the emerging consensus in both the mainstream and independent media that the economy’s unemployment problem is cumulative, structural and long term. But the prescription is entirely inadequate to the diagnosis. This should come as no surprise, as official sources have offered muddled and confusing accounts of the patient’s malaise.

The Official Story: Unrealistic Optimism and Misleading Statistics

The White House and the Fed can’t seem to coordinate their stories. In January the president’s Council of Economic Advisors reported that the official unemployment rate would remain close to 10 percent for at least 3 years, through 2012. The Council foresees unemployment above 6% through 2015 and above 5% through 2020. But on Feb. 24 Ben Bernanke reported to Congress a projected unemployment rate of 6.5 to 7.5 percent by the end of 2012.

Both estimates almost certainly display the typical overoptimism of official economic forecasts. There are two main reasons for the chronic unrealistic optimism. The official measure of unemployment excludes both those who have given up looking for work because of the lack of jobs, and involuntary part-time workers. If these are taken into account, the more realistic unemployment rate would be at least 16-17 percent.

A second factor distorting unemployment projections is the unrealistic rate of economic growth projected by official sources. The Council assumed real GDP growth of 3.0 percent this year, and 4.3 percent in 2011. Bernanke forecast “a moderate-paced economic recovery, with economic growth of roughly 3 to 3.5 percent in 2010 and 3.5 to 4.5 percent in 2011, consistent with modern economic growth.” By “modern economic growth” Bernanke refers to the healthy growth rates of what economists call the “Golden Age”, the period from 1949 to 1973. This was the longest period of sustained economic expansion in American history: the economy grew at an average annual rate of 4.3 percent -the growth rate foolishly predicted, recall, for next year by the Council of Economic Advisors- and private-sector jobs increased at a rate of 3.5 percent a year. And in 1973 the real median wage was the highest it’s ever been.

The Golden Age is a benchmark for the authorities, and “recovery” is taken to mean a return to growth and employment rates at or close to those of 1949-1973.

It is worth looking at some of the ways the administration and the media suggest the implausible scenario that Golden-Age economic conditions are on the way to resurrection.

Statistical manipulation and half-truths are not uncommon. For example, in January the economy continued to bleed jobs, which is bad; it was also widely reported that the unemployment rate fell, which looks good. Both stats are accurate. How is this possible? The official unemployment rate fell because the number of workers leaving the workforce declined more rapidly than job losses.

For the week ending February 20, first-time jobless claims increased by 20,000. But we were told there was a silver lining: the number of unemployed workers collecting federally sponsored extended benefits dropped by 323,000. But this does not mean that those workers found employment. The decline is almost entirely due to workers having exhausted extended benefits prior to Congress approving another extension.

On February 25 the Commerce Department reported a 3 percent January increase in sales of durable goods. This looks especially promising: increased purchases of consumer durables such as autos, refrigerators and other big-ticket items had been a major factor in reversing most post-Second-World-War recessions. But a closer look reveals that when defense and aircraft purchases are subtracted durable goods sales fell by 2.9 percent. This comes as no surprise: with the number of unemployed continuing to increase, we should expect sales of higher-priced consumer goods to decline accordingly.

The media have claimed a rebound in manufacturing over the last few months, suggesting a corresponding job rebound in the making. In fact, an inventory bounce was in play. Businesses were re-stocking after an extended hiatus on new orders. The evisceration of US manufacturing which began with the “deindustrialization” of the late 1960s persists through the recession, with the reorganized General Motors currently planning the export of more jobs to low-wage countries. There is a telling indicator of the state of US manufacturing: we have no domestic consumer electronics industry.

Wal-Mart’s fortunes are considered a good measure of consumer spending. The company is after all the world’s largest retailer and the country’s single biggest employer. The business press reports that Wal-Mart’s profits continued to climb during the downturn, implying that consumers are managing to hold up in spite of the recession. But we want to know about the company’s domestic sales, a more accurate indicator of consumer purchasing power than total profits, which include overseas sales. In fact, Wal-Mart recently announced its first drop in domestic sales in its history, a decline of 1.6 percent, compared to a 2.4 percent increase for the same period a year ago. The relatively rosy profit picture is due to international sales, especially in Brazil and China. The sales decline is of course yet another indicator of cumulative unemployment.

Finally, there is the statistical sleight-of-hand of the Bureau of Labor Statistics (BLS). BLS performs a "net birth/death adjustment" on its unemployment data. The birth/death model uses business deaths to "impute" employment from business births. Thus, as more businesses fail, more new jobs are imputed to have materialized through business births. The birth/death model is based on statistics covering 1998-2002. This was a period during which explosive telecom and startups outumbered business failures. That period bears no resemblance to today's flat economic landscape. While the "surplus" jobs created by start-up firms has been revised lower this year, BLS continues to report from the indefensible assumption that jobs created by start-up companies tend to offset jobs lost by companies going out of business. John Williams of Shadow Government Statistics estimates that at least 50,000 birth/death jobs were conjured up in this way in the most recent BLS report.

The Overall Employment Picture and the Handwriting on the Wall

What’s relevant for assessing the health of the economy is that job losses continue to be cumulative. Things continue to get worse at a slower rate, but this should be no comfort in the context of an economy that has lost 8.4 million jobs since December 2007, including more than 4 million in the last 12 months alone. More than 15 million Americans are looking for work, and 6.3 million have been unemployed for 6 months or longer, the largest number since the government began keeping records in 1948 and more than double the number in the next-worst recession, Reagan-Volcker’s downturn of the early 1980s. 2.7 million will lose their unemployment benefits before the end of April unless Congress extends payments. On top of all this, the economy must add 100,000 new jobs every month just to absorb first-time entrants to the labor force.

Obama acolytes will point out that while this is a regrettable picture, it does not imply that administration policy has produced no jobs whatsoever. But on examination none of the job additions announced by the administration since the fourth quarter of 2009 is indicative of an economy in recovery or the return of permanent jobs. Most fall under the category of “saved” jobs. Employment improved for a while in sectors that are the direct beneficiaries of monetary or fiscal stimulus: government, healthcare, financial services, education and retail sales. These jobs don’t reflect the independent strength of the real economy; they would not have materialized absent the stimulus. Meanwhile, sectors such as manufacturing, the most reliable indicator of an intact real economy, continued to shed jobs at an alarming rate. The stimulus will not persist forever, and when it is withdrawn, the "saved" jobs will be among the first to go. Some have already begun to evaporate: schools, hospitals and state and local governments have been shedding jobs like crazy.

These data point to the atypical nature of the current stream of job losses. We are not witnessing the kind of unemployment that attends a garden-variety recession. That type of unemployment disappears as the economy recovers. Peter S. Goodman points out in a detailed analysis in The New York Times that the recovery, whenever it begins, will not bring sufficient jobs to absorb the record-setting ranks of the long-term unemployed. (“The New Poor: Millions of Unemployed Face Years Without Jobs”, February 21, 2010) He describes the new poor as “people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives – potentially for years to come.”

Goodman fleshes out an emerging consensus among mainstream business observers that he had described this time last year. In “Job Losses Hint at Vast Remaking of Economy” (NYT, March 7, 2009) we were told that “…growing joblessness may reflect a wrenching restructuring of the economy…. In key industries – manufacturing, financial services and retail – layoffs have accelerated so quickly in recent months as to suggest that many companies are abandoning whole areas of business. “These jobs aren’t coming back,” [said a chief economist at Wachovia] “a lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than in the United States. There are going to be fewer stores, fewer factories… Firms are making strategic decisions that they don’t want to be in their businesses.” The article quotes a Stanford Hoover Institution economist as saying “The decimation of employment in legacy American brands such as General Motors is a trend that’s likely to continue. We have to stimulate the economy to create jobs in other areas.” This was one of the first allusions to what is now referred to as “the new normal.”

The especially intractable unemployment problem is the result of structural and institutional changes in the economy. Institutional investors have come to own an increasing percentage of large companies. The new owners are driven to increase shareholder value by going for quick profits. Cutting payroll is standard procedure. The structure of the labor market has been affected by the decline of union power: employers can reduce costs by relying increasingly on part-time and temporary workers. Exporting manufacturing and even white collar jobs to lower-wage countries further reduces the demand for US labor.

Unless a political movement emerges with the explicit goal of directly reversing these tendencies, none of this will change under current policy.

That these developments have been in the making for decades is evident in employment changes in business cycles -the economy’s inhaling and exhaling, successive periods of expansion and contraction- since the 1950s. During the Golden Age, from the 1950s through the mid-1970s, private-sector jobs increased during economic upturns/expansions at a rate of 3.5 percent a year. During 1980s and 1990s expansions, job growth dropped to 2.4 percent annually. Since 2000, the figure fell to 0.9 percent. The pace of job growth has steadily declined in each post-Golden-Age expansion.

That this is indicative of an unfolding structural deficiency in the economy is also shown by trends in the time it takes for a cyclical upturn to regain the jobs lost in the preceding recession. Between 1950 and 1990 it took the economy an average of 21 months to return employment to its previous peaks. After the 1990 and 2001 recessions the respective durations were 31 and 46 months.

This ongoing deterioriation in the performance of the labor market has led to the notion of the “jobless recovery.” For most of US economic history this term would have been considered self-contradictory. That it is now part of common economic discourse is testimony to a major conceptual revision in the discourse of propaganda: that the economy is recovering is no reason to expect unemployed workers to find work. Economic recovery is now treated as consistent with declining standards of living. Lowered expectations and acquiescence in long term working-class hardship are now built into what we are told to regard as recovery.

The Old Economics as Irrelevant to the Current Crisis

Within the framework of mainstream neoclassical economic theory, there are two outstanding confusions concerning the notion of “recovery.” There is the misconception that once the economy begins its recovery it is on the way to sustained growth. That is not how capitalism works. The standard use of ‘recovery’ connotes a resumption of economic growth out of a cyclical recession. An economy has recovered when it has regained what was lost since the peak of the previous expansion. A new period of expansion is under way only if growth persists beyond the recovery. Restoring the economy to health requires not only a period of successful recovery, but also sustained growth beyond the previous peak. The prevailing talk erroneously assumes that only the first condition is at stake. As things stand now with respect to employment, spending, bank lending, sales of consumer goods, the downward trajectory of wages, and investment in the real economy, there is no policy in place that gives reason for optimism regarding a recovery. A fortiori, there is even less reason to expect renewed expansion.

A second confusion surrounds the very use of the term ‘recovery’. No alternative terminology is at hand, but ‘recovery’ needs to be replaced. For the term suggests a return to a prior state of economic normalcy, a healthy economy. But the state of the economy prior to the onset of the meltdown, prior to the burgeoning of the housing bubble, and even prior to the bubble, was neither normal nor healthy.

The bubble years began in the early 1990s, around the time Al Gore started nattering about the “information superhighway.” Bubble- and debt-driven growth is neither normal nor healthy. Since the late 1970s the US was well into deindustrialization, depressing net investment in the widget-producing economy and correlatively goosing investment in the financial sector, which began its now-infamous disproportionate growth relative to both total investment and GDP growth. Household debt had also begun racing ahead of the growth of both disposable income and GDP. Since 1973 the median wage has essentially flatlined. Put this all together and what do you get? GDP growth increasingly driven by speculative activity rather than real production, and household spending decreasingly fueled by current income and increasingly driven by debt, the mortgaging of future years’ expected income. “expected” is key here. Bubbles inevitably burst and the connection between the real and the financial economies reasserts itself with a vengeance. Income expectations are not met and debts cannot be repaid. Crisis ensues.

No serious commentator expects a return to anything resembling Golden-Age prosperity. The economy is in the process of reconfiguration. Postwar recessions through the 1970s were typically reversed by means including Fed monetary policy of reducing interest rates. The Fed is now treating the crisis as if it were a standard downturn, only a lot bigger. Accordingly, Bernanke has been releasing a virtually continuous flood of liquidity to no discernible effect.

A greatly expanded stimulus is needed, and one that directly creates jobs. The Obama administration has no such intention.

Obama’s Jobs Policy

The administration wants to get the credit machine running again so that the private sector can resume what is taken to be its natural function as principal creator of jobs. Obama’s advisors reason that since most Americans are employed by small businesses, priority must be given to enticing these operations to start hiring. So Obama proposed $33 billion in new tax credits for small businesses, and on Wednesday the Senate sent the “Hire Now Tax Cut” for Obama’s signature. The administration is pitch blind to the fact that businesses will not invest and hire unless they have reason to believe that they will have customers, consumers ready, willing and able to spend. Consumers would be ready and willing to spend were they able. But they are not. Piss-poor and declining wages, joblessness and record indebtedness are of course the principal obstacles. Commercial establishments hire when they expect customers/buyers, and capitalists invest in production when they expect profits. No rational employer/investor has any such expectations. The circle is vicious: businesses won’t hire because workers have no money, and workers have no money because businesses won’t hire.

The circle will remain unbroken unless the lead actor in this tragedy, the consumer/worker, is provided with the means of spending from a source outside the circle. This can only be government. As labor militancy forced FDR to acknowledge, government must become a direct provider of employment. Obama has ruled this out. At the December 3, 2009 “jobs summit” he repeated one of his favorite refrains: “I want to be clear: While I believe the government has a critical role in creating the conditions for economic growth, ultimately true economic recovery is only going to come from the private sector.” He admonished those who push for a government jobs program “to face the fact that our resources are limited….It’s not going to be possible for us to have a huge second stimulus, because frankly, we just don’t have the money.” He was of course referring to the massive federal budget deficit of $1.4 trillion. He left unnoted that the major reasons for the tripling of last year’s deficit and explosive growth of the national debt was the bailout of the banks and the titanic “defense” budget. (The administration plans to spend more on defense in real terms than any administration since 1948 – a period encompassing the entire duration of the Cold War. Recall that this includes two large-scale, protracted regional wars in Korea and Vietnam.) One searched in vain among the newspapers and magazines of the Ministry of Information for any critical suggestion that imperialism and the plutocracy are for Obama a higher priority than rescuing working people from creeping mass destitution.

Wednesday’s gesture towards addressing the jobs catastrophe is recognized as play-acting. A February 10 Associated Press report titled “Promises, Promises: Jobs bill won’t add many jobs” commented that the Senate bill “has a problem: It won’t create many jobs…. Even the Obama administration acknowledges the legislation’s centerpiece – a tax cut for businesses that hire unemployed workers – would work only on the margins.” The Congressional Budget Office has estimated that the tax break just passed will generate only 18 full-time jobs per $1 million spent.

The ineffectiveness of these policies is crystal clear. The administration either doesn’t care, or will not allow itself to grasp the obvious. It’s commitment to market fundamentalism requires blindness, and the requirement is met.

The Longstanding Travails of Small Business

The focus of the current legislation on small business is oblivious to finance capital’s decades-long disdain of this sector. In December 2009 the Federal Deposit Insurance Corporation (FDIC) released figures showing that the amount of loans outstanding in the nation's banks fell $210.4 billion in the third quarter of 2009. That was the largest quarterly decline since the FDIC began tracking loans in 1984. "We need to see banks making more loans to their business customers," Federal Deposit Insurance Corporation (FDIC) Chairwoman Sheila Bair told reporters. The FDIC figures show that banks have been deemphasizing business lending for many years, long before the current contraction commenced. Since September 2008 the trend has intensified, with business lending contracting at a much faster pace than consumer lending.

The FDIC’s tracing of this shift over the past decade underscores banks’ increasing preoccupation with financial shenanigans at the expense of investment in the real economy. At the end of the third quarter of 1999, the assets of the nation's banks totaled $5.5 trillion. As of September 30 of 2009, bank assets had grown to $13.2 trillion. But commercial and industrial loans outstanding barely budged, only growing from $947 billion a decade ago to $1.27 trillion by September 30 this year. At the same time, loans secured by real estate increased from $1.43 trillion in the fall of 1999 to $4.5 trillion this fall. And investment in securities doubled, rising from $1.03 trillion to $2.4 trillion. Last month the FDIC reported that bank lending contracted 7.4 percent in 2009, at the fastest pace since 1942, the first year of US involvement in the Second World War

Banks have lent sparingly to businesses for the past 35 years. Businesses report that in each quarter since 1974 -the very beginning of post-Golden-Age austerity-ease of borrowing was either worse or the same as it was the prior quarter. Business loans were increasingly hard to get over this entire period.

The data reveal a secular shift away from productive lending to businesses toward nonproductive lending to consumers and speculative investments.
Here is yet another indication of the structural deficiencies and institutional transformations discussed above that are generating a reconfigured economy. Neither standard monetary pump-priming nor Obama’s anemic measures are up to the task of addressing this historic transformation of the US economy. The deindustrialized, financialized, debt-bloated private economy is no longer a feasible basis of economic revitalization. The public sector must shift into gear. How? Well, it’s not as if we lack historical precedent.

Two Kinds of Long-Term Public Investment/Employment

The administration’s opposition to long-range public investment is adamant. The Washington Post (November 8, 2009) noted that White House officials reject the idea because it “does not produce long-term value”. One suspects that “long-term value” means long-term private profit. But why should public investment be expected to produce private profit… unless the administration adheres to the metaphysical premise that all public and private needs can and should be met through the market. We have seen above that Obama is just such a metaphysician. He channels his advisors. Lawrence Summers, the chief economic advisor, asserted on October 19, 2007: “[P]olicy measures to spur growth or achieve other objectives should wherever possible go with, rather than against, the grain of the market….There is no such thing as the success of the American economy that doesn’t involve very substantial success for America’s entrepreneurs and for American companies.” This is the old-time economic religion that is adhered to by the Washington powerful, and which can be defeated only by mass action.

If we are talking seriously about a genuine economic recovery, we advocate what we might call a “national economic project”. I mean a large-scale public investment policy that would employ millions of workers in a range of projects and services designed to address immediate and pressing needs. Most advocates of such a plan envisage government-funded public works programs to hire the unemployed. They are right. But more is required, namely public-service employment designed to meet needs not addressed by relying solely on infrastructure projects.

The case for infrastructure rehabilitation is powerful. The most reliable source of information regarding the state of the US infrastructure is the American Society of Civil Engineers, which has released a “2009 Report Card for America’s Infrastructure”. (Read it here: The Report Card stresses the advanced decay of roads, surface transit and aviation, tunnels, dams, bridges, public parks and recreation, schools, drinking water, levees and sewerage facilities. Accordingly, Uncle Sam earned a grade of “D” . The engineers describe in exacting detail the most urgent problems, and price the investment need in infrastructure repair at $2.2 trillion.

In recent years there has been especially rapid deterioration in an infrastructure already in a state of advanced decay. There were, for example, almost four times as many “high hazard” deficient dams in 2007 (1,826) as there were in 2001 (488). The Report states that “Many state dam safety programs do not have sufficient resources, funding, or staff to conduct dam safety inspections, to take appropriate enforcement actions, or to ensure proper construction by reviewing plans and performing construction inspections.”

The $787 billion “stimulus package” monies that might address what is in fact an emergency situation are the $71.76 billion allocated to construction projects, most of which remains unspent. This comes to one thirtieth of the required $2.2 trillion, a shortfall of $1.176 trillion.

It is clear that the relevant project is national in scope and therefore requires the creation of new jobs on a coast-to-coast scale. This task cannot be met by the private sector alone.

In the light of what’s been outlined above, Obama’s promotion of alternative energy and “green” investment as a cure-all for mass unemployment is ridiculous. We have been told that incentivizing homeowners to weatherize their houses -“cash for caulkers”- would represent a major step in addressing the jobs crisis. Like Obama’s other proposals, “cash for caulkers” would have the teensiest impact on unemployment, but it will provide major bucks for special business interests like Home Depot, whose chief executive was the most enthusiastic proponent of this idea at the jobs summit.

The New Deal’s public employment projects were on the whole great successes. The 1933 Civilian Conservation Corps (CCC) provided men (no women) work in the national forests and employed 2.5 million through 1942. In the same year the Civil Works Administration was established by executive order and within one year it created jobs for 4.3 million people. The Works Progress Administration (WPA) of 1935 employed millions and oversaw, over the course of 8 years, the construction and repair of 650,000 miles of roads and the building of schools, libraries and recreational centers. It’s support of the construction of neighborhood parks employed skilled and unskilled workers, architects and artists. It also established the only federal arts program the US has ever had.

As for the administration’s claim that public investment “does not produce long-term value”, the CCC and WPA contributed hospitals, schools, auditoriums, museums, city halls, court houses, fire stations, water works, parks, fairgrounds, farmers’ markets, and a range of other facilities. Many of these are in use to this day. What was created is astonishing: Hoover Dam, the San Francisco Cow Palace, DC’s Reagan National Airport, Houston’s City Hall, the San Antonio River walk, Bandelier National Monument in New Mexico, the Mountain Theater on California’s Mount Tamalpais and the Eighteenth Precinct police station in New York City. Many of us have forgotten, or never knew, that these were New Deal projects. Most remember the collapse in August 2007 of the I-35W bridge in Minneapolis, opened in 1967. This drives home how impressive it is that a depression-era contribution to the US transportation system like New York’s Triborough Bridge still carries traffic every day.

The notion that government should assist or even take the lead in this kind of investment was not born of the Depression. It’s almost as American as apple pie. Alexander Hamilton, and later the early nineteenth century Whigs, advocated “internal improvements” like canals, turnpikes and, later on, railroads. (Hamilton’s motives were mixed. He intended of course to foster economic expansion westward, but he also had in mind the parallel development of America’s financial markets.) That government needed to be involved in these projects was plain economic good sense: because these undertakings required substantial initial outlays but delivered returns only over time, private investors could not foot the bill by themselves. They thus needed government assistance, either in the form of financing, or, as with the railroads, spectacular gifts of public land, to make them possible.

Investing in physical infrastructure and green energy will give the greatest stimulus to two kinds of jobs, construction and manufacturing. We who urge these types of spending have given insufficient attention to the distributive desiderata of public spending. We have not addressed two essential criteria of an equitable jobs program: public investments should be selected with the aims of maximizing the extent of immediate job creation, and of ensuring that the benefits of job creation are available to the broadest possible category of worker, especially the most vulnerable to job insecurity. The results of a recent study by the Levy Economics Institute of Bard College are helpful in this respect. The Levy research shows that social-sector investment in areas such as early childhood education and home-based care are especially suited to meet the needs identified by these two criteria.

Social care investment generates more than twice the number of jobs as infrastructure spending and 1.5 times the number of jobs as green energy spending. And social care investment is more effective than each of the other types in providing work to those with the least education, low-income households and women. It also creates jobs in occupations identified in a 2006 Bureau of Labor Statistics study as among those most likely to add the greatest number of jobs between 2006 and 2010: teaching, child care and home health care. While most social-care jobs would be suited to the above categories, a significant number of jobs would also require some college education and are geared toward middle- and top-income groups. Even Tim Geithner acknowledged two Januaries ago that “social sector job creation delivers more bang for the buck.”

We have seen that the administration’s predilection for indirect job provision, through financial institutions, will not succeed. Social care expansion consists in direct job-creating investment in social infrastructure, unlike the “welfare reform” welfare-to-work of Bill Clinton or public cash assistance. And mainstream-type arguments support social infrastructure investment: it is more cost effective than hospital or institutional care for certain chronic patients, and home-based care lifts a burden off family members and allows them to be more productive at work. According to a 1999 Metropolitan Life Insurance Company study, this would save the economy more than $33 billion a year in lost productivity. That should water the mouthes of private employers.

Appeals to the more progressive are also at hand. Women provide a treasury of unpaid care to children and the elderly. Social care investment would provide direct payment for these highly valued services.

The employment crisis is as urgent as urgent gets, and intractable under the present economic settlement. The inneffectuality of politics as usual could not be clearer. The stubborn liberal hope, that mainstream politicians - financial investments made flesh- can be talked or voted into repudiating their masters’ priorities, persists as if unfalsifiability were a virtue. This delusion cannot be undefeatable. That would mean, by implication, that history has come to its conclusion. But history has no conclusion. America has in hand a workable and desirable middle-term prescription for ordinary folks’ mounting afflictions. The task is to get it out.

Canada Beats the U.S.

No, I’m not offering up a delayed report on the Olympics. But I am following up on earlier post on why Canada avoided a banking crisis.

In today’s (March 19) Wall Street Journal, AEIs Alex Pollock provides an important piece of the puzzle. Canada avoided a housing crisis, the progenitor of the U.S. banking crisis. It did so by having sounder banking and housing policies. Above all, it had no Fannie Mae & Freddie Mac.

Canada isn’t a free-market paradise. But it beats the U.S. in banking and housing policies. I commend Alex’s article to you.

11 Responses to “Canada Beats the U.S.”

  1. David Stinson Says:

    While it may manifest itself in a number of ways, many of these pieces comparing Canada and the US can be summarized as follows: there is significantly less moral hazard in the banking and mortgage system in Canada.

    Few commentators express it in those terms, I think, because the implied remedy is to reduce moral hazard in the US system. And, of course, we can’t have that. Also, they prefer the alternate narrative that there is “better regulation” in Canada.

  2. JP Koning Says:

    “Above all, it had no Fannie Mae & Freddie Mac.”

    It’s starting to get a bit annoying how many people get this wrong. Canada does indeed have its own Freddie/Fannie.

    The Canadian Housing Trust (CHT), managed by the CMHC (mentioned in the article), has been buying government-guaranteed MBS since being founded in 2001. The Insured Mortgage Purchase Program (IMPP) run by the Finance Dept has been buying MBS since being founded in 2008.

    Together, the CHT and IMPP are the largest holders of mortgage debt in the country. They hold more than the Royal Bank and TD Bank combined. How the author can ignore these two massive government buyers is beyond me; he seems quite intent on sacrificing facts for the sake of scoring ideological points.

    The only difference between Canada and US is that the Canadian government got into the mortgage buying game later than the US (2001 vs 1980s), and hasn’t yet had to pay the consequences.

  3. Bill Stepp Says:

    Canada has always had a better banking system and didn’t have a central bank until 1935, etc. Do you think this might have anything to do with the fact that a lot of the early settlers to Canada were Scottish, and that they brought more of a free banking-oriented tradition with them?

  4. David Stinson Says:

    Also, (now) lower deposit insurance (I think)
    and no track record of too big to fail (at least in the banking world), although government purchase of MBS is certainly a form of support (as is Fed/Bank of Canada credit easing, I suppose).

  5. Gene Callahan Says:

    ‘Also, they prefer the alternate narrative that there is “better regulation” in Canada.’

    Isn’t less moral hazard an example of better regulation?!

  6. chidemkurdas Says:

    The WSJ piece is excellent. The point that Canadian mortgage lenders have full recourse to the borrower’s other assets — so owners can’t borrow wildly and then just walk away from the property when they can’t pay — is surely an important factor explaining why Canada did not have a real estate bubble. This is a key difference from US law.

  7. Laws on mortgage recourse vary by state. In CA and NV, the lender has one recourse: either forecclose, or sue for payment. But not both.

    In TX and other states, lenders may pursue both courses and file liens, etc. One would think someone has done a paper on the differences among states.

  8. chidemkurdas Says:

    My impression from living in NY is that it’s no recourse. It would be interesting to see how differences in states laws affect the markets.

  9. JP Koning Says:

    Some time ago I read a paper on the varying mortgage recourse rules among US states. Recourse does seem to have an empirical influence:

    “Recourse and Residential Mortgage Default: Theory and Evidence from U.S. States”

    available here;

  10. Walker Todd Says:

    The latter posts are onto something. Years ago (about 30 in fact) the Fed did a study on mortgage recording and recourse practices among the states. The states where the bankers wrote the rules allow foreclosure plus recourse to the debtor. The states where debtors wrote the rules allow recourse or foreclosure but not both. Or foreclosure only. The Eastern states tend to be pro-banker; once you cross the Appalachians and the Ohio, the rules become more debtor-friendly.

    No matter, however. There is an underlying ethics of the thing. If you are a believer, then read the later Jewish prophets. What do you think that they are writing about?

    If you are not a believer, get Aristotle’s The Athenian Constitution and read the story of Solon of Athens.

    Whether you like it or not, debt reduction, cancellation, and forgiveness are part and parcel of every successful social regeneration in history. “Pay or become my slave” is a different ethical (and historical) consideration altogether. But here’s the rule (see Aristotle’s Nichomachaean Ethics, book on “Justice”): Such forgiveness has to be an extraordinary remedy (in domestic affairs), once every two generations or so at most. The ancient Hebrews restored the Ancient Homesteads once every 50 years.

    It’s time. That raving radical leftist economist (I jest), Larry Lindsay, suggested in the fall of 2008 that the feds should just give it up and agree to refinance everyone at 4.5 percent. Absolutely the correct and a Solon-like remedy. Analogous to the Home Owners Loan Corporation of the 1930s (other raving lunatics like Alex Pollock of AEI, Lowell Harriss of Columbia [he wrote the book on the HOLC], and of course myself also advocate HOLC-like remedies for the current mess).

    When the banks were bailed out with TARP funds, the feds only reluctantly took warrants and received, as I recall, only one warrant for every $7 advanced. When Jesse Jones in the 1930s and Roger Altman in the late 1970s (Chrysler) did it, the warrants were dollar for dollar. What is the TARP approach but a generous debt reduction for the banks? Yet the banks could not and would not extend the same mercy to their borrowers.

    In any case, both believers and nonbelievers would profit from reading and thinking about Luke 16:1-8, where a steward commits an action analogous to Solon’s. There, Jesus appears to commend that action.

    See also, Matthew 18:23-35, where the king forgives his steward’s large debt but afterward the steward will not forgive a smaller debt that a man owes to him. The steward is denounced as wicked. What, then, if any, was the situation of our banks over the last two years?

    I learned these stories in my youth, and Ed Kane recently reminded me of them.

    On the other side of the line of righteousness, what do you think John Maynard Keynes’s The Economic Consequences of the Peace was about? Giving us more efficient tax farmers, perhaps? Or something else entirely, more along the lines of the stories I have just recounted?

    It ill behooves a set of bankers who just received the greatest forgiveness in the history of man to turn around and exact strict conditions from their debtors. And bankers who don’t want to be put into the position of seeming to have to forgive should not put their debtors into floating rate mortgage loans during a bubble in the first place.

    It’s an odd set of reasoning to say, “Because the government encouraged stupid lending, I had no other choice.” When caught, the banker may ask for forgiveness, I suppose. But if forgiven, he certainly needs to look to forgiveness of his own debtors. And you can quote me on that.–Walker Todd

  11. Walker always raises the relevant issues.

    There is a move to return in effect to debtor prisons by removing categories of debt from bankruptcy. Left and right have each contributed to this. It is just special-interest legislation.

    If bankruptcy is to be serious, all debt should be subject to the proceedings. Including tax debts.

    If we want to return to debtors prisons, it is a viable system. Wives and children can be sold into slavery until the debts are paid off. It works. (For the humorless, that is irony.)

    I do think, however, that systems that are generally creditor friendly can protect debtors through lower interest rates. The worst policy is to create regime uncertainty about debt contracts. That is what has happened recently.

Disrobing the Papacy –

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The See of Rome only took on particular importance centuries after the life of Peter, with the crowning of Charlemagne and the advent of the Holy Roman Empire. Subsequently, popes have come to wield tremendous worldly power, but much of their history has been occluded from the public.

Perhaps the craziest pope of all was Stephen VII, who reigned in 896-97. He dug up a predecessor, Formosus (who reigned 891-96), dead for more than nine months, dressed him up in full pontificals, held a mock trial, and found him guilty of having been ineligible to be the bishop of Rome. As “punishment”, the two fingers with which Formosus had given his (anti)apostolic blessings were chopped off and the body was thrown in the Tiber.

The youngest pope was Benedict IX, who at the age of eleven was elected pope in October 1032. He was driven out of office twice, and twice recovered it. In 1045 he dispensed himself from the obligation of celibacy in order to marry a beautiful young cousin and abdicated in favour of his godfather, Gregory VI. Having been turned down by his cousin, however, he managed to climb back onto the throne for another eight months before retiring to a monastery.

The Cambridge Medieval History (eds Gwatkin and Whitney, The Macmillan Co., 1911-13, vol. vii, p. 5), which records the general sentiment or judgement of modern historians, says that ‘the evidence seems conclusive that he [Boniface VIII] was doctrinally a sceptic and concealed under the mitre the spirit of mockery’. King Philip IV of France, supported by civilian lawyers concerned to exalt his authority against that of the pope, opposed the Bull ‘Unam Sanctam’ of Boniface VIII. He summoned his Parliament in Paris and laid before it an impeachment of the pope for heresy, simony and rapacity. Boniface was specifically accused of ‘…wizardry, dealing with the Devil, disbelief in Jesus Christ, declaring that sins of the flesh were not sins, and causing the murder of Pope Celestine and others. He had a certain ‘idol’ in which a ‘diabolical spirit’ was enclosed whom he was in the habit of consulting … a strange voice answered him’ (A History of the Popes, Dr. Joseph McCabe, C.A. Watts & Co, London, 1939).

In 1303, Pope Boniface VIII was seized at Anagni, to where he had fled, and was delivered to Paris to be tried. Sciarra Colonna and his embittered family were at the French court and a General Council was convened at the University of Paris. Before five archbishops, 22 bishops, many monks and friars, Boniface VIII jeered habitually at religion and morals, and made this remarkable statement:

‘There was no Jesus Christ and the Eucharist is just flour and water. Mary was no more a virgin than my own mother, and there is no more harm in adultery than in rubbing your hands together.’ (A History of the Popes, McCabe, ibid.)


The unpopularity of the popes was such that over the centuries many of them were murdered or driven from Rome by mobs or imperial enemies. For a total period exceeding 240 years between 1119 and 1445, popes were regularly and forcibly evicted from Rome, reigning variously in Avignon, Anagni, Orvieto, Viterbo, Siena, Florence, Pisa and Perugia.

As early as 1119, for example, the locals revolted against Pope Gelasius II (1118-19), who fled to Gaeta in southern Italy by rowing down the River Tiber in a dinghy. As he escaped, the angry crowd ran along the river’s edge, hurling stones, arrows and foul abuse at the rapidly disappearing pope.

Similarly, Pope Gregory VIII (1187) was so hated for his crime of blinding his opponents (as was Pope Adrian III, 884-85) that the locals tied him backwards on a camel and paraded him through the streets of Rome, screaming vulgarities at him and pelting him with rocks until he was dead (Diderot’s Encyclopédie).

To avoid impending charges of murder, Pope Calixtus II (1119-1124) desecrated the alleged tomb of St. Peter and fled to Constantinople with ’silver panels from the doors’, ‘thick plates of gold’ that had covered the altars and ‘a solid gold stature’ (A History of the Popes, McCabe, op. cit.).

The last recorded pope to be evicted from Rome was Eugenius IV (1431-47), who spent most of his nine-year exile living in the brothels of Naples (Diderot’s Encyclopédie).” – Tony Bushby, The Criminal History of the Papacy

Do you think things have changed much since then? Have the people in charge cleaned things up or has the Vatican remained unconscionably corrupt? Do you think similar abuses of power happen today? If so, why do you think people don’t get similarly boisterous in their disgust? How does the corruption of the Vatican compare with political corruption? What strategies might help undercut this situation?

16,500 more IRS agents needed to enforce Obamacare Read more at the Washington Examiner:

New tax mandates and penalties included in Obamacare will cause the greatest expansion of the Internal Revenue Service since World War II, according to a release from Rep. Kevin Brady, R-Texas.

A new analysis by the Joint Economic Committee and the House Ways & Means Committee minority staff estimates up to 16,500 new IRS personnel will be needed to collect, examine and audit new tax information mandated on families and small businesses in the ‘reconciliation’ bill being taken up by the U.S. House of Representatives this weekend. ...

Scores of new federal mandates and fifteen different tax increases totaling $400 billion are imposed under the Democratic House bill. In addition to more complicated tax returns, families and small businesses will be forced to reveal further tax information to the IRS, provide proof of ‘government approved’ health care and submit detailed sales information to comply with new excise taxes.

Americans for Tax Reform has a good breakdown of the bill by the numbers.

Isn't it reassuring that at a time of recession, government will do what's necessary to ensure its growth?

U.S. denies reports on discussions with China over N. Korean contingency

WASHINGTON, March 18 (Yonhap) -- The United States Thursday denied reports that it will soon have closed-door discussions with South Korea and China on plans for upheaval in North Korea.

"I have not been told we are going to have this type of meeting at this particular point," a senior State Department official said, asking not to be named. "If we are working on that in sort of an early stage, that could be possible."

Reports said that representatives of the U.S. Pacific Command and state-run defense think tanks of South Korea and China will get together in Beijing next month to discuss control of nuclear arms and other weapons of mass destruction and refugees in case of a coup or the sudden death of North Korean leader Kim Jong-il.

U.S. Assistant Secretary of State Kurt Campbell reportedly said in Seoul recently that he believes the ailing North Korean leader may have only three years to live, based on medical analyses.

Kim Jong-il is said to have suffered a stroke in 2008, and has recently appeared gaunt. Rumors persist that he is grooming his third and youngest son, Jong-un, 27, to assume leadership, just as he did in 1994 with the sudden death of his father, Kim Il-sung, the founding father of the communist North.

Secretary of State Hillary Clinton and other senior U.S. officials have publicly discussed contingency plans for the North, but China, Pyongyang's biggest benefactor, has refused to talk openly with the U.S. on the subject in order not to rile its communist ally.

North Korea recently warned of a war against South Korea over reports that Seoul had come up with a new operational plan jointly with the U.S., called OPLAN 5029, in case of regime change or other contingencies in the North.

China maintains an alliance with North Korea that calls for automatic involvement in any military conflict.

At issue are loose nuclear materials that might be funneled to terrorist groups, and a potential flood of refugees to the northeastern part of China, which borders North Korea.

U.S. officials have said they would mobilize to send troops to North Korea in case of a crisis there. The U.S. currently maintains 28,500 troops in South Korea as a legacy of the 1950-53 Korean War.

A Council on Foreign Relations report has said that an additional 460,000 troops -- three times the number of U.S. troops deployed in Iraq -- would be needed to help maintain stability in North Korea and assure the safe removal of North Korea's nuclear warheads and other weapons of mass destruction in case of its collapse.

North Korea detonated its second nuclear device in May last year, after an earlier test in 2006, and is believed to possess ballistic missiles capable of reaching parts of the mainland U.S.

The CFR report also stressed the need for the U.S. to seek "a quiet dialogue" with China "to reduce the risk of misunderstanding and friction in a crisis involving North Korea."

China, meanwhile, will likely join forces with Russia to prevent U.S. forces from approaching their Far Eastern borders, Richard Weitz, senior fellow and director of the Center for Political-Military Analysis at the Hudson Institute, said recently.

"A joint occupation might also occur if neither Russia nor China felt comfortable allowing the other to dominate the peninsula through unilateral occupation," he said.

Beijing and Moscow have forged military ties in recent years through the Shanghai Cooperation Organization, which includes several Central Asian states, apparently to counter the U.S. military presence in the Pacific.

China and Russia have conducted joint military drills to cover Vladivostok, Shandong Peninsula and seas surrounding the Korean Peninsula since 2005.

China, which has long been a lifeline for the impoverished North with the provision of food, energy and other necessities, joined with Russia, another veto-wielding power on the U.N. Security Council, in watering down U.N. sanctions adopted after the North's nuclear and missile tests early last year.

Some analysts say China may be willing to acquiesce to North Korea's possession of nuclear weapons, although Beijing has been hosting the six-party talks, also involving South Korea, the U.S., Japan and Russia, for the North's denuclearization since 2003.

Beijing, with an eye on superpower status, is also said to prefer the status quo to any instability -- or Korean reunification led by South Korea and the U.S.

China has invested heavily in North Korea in recent decades despite the on-and-off North Korean nuclear crisis, and has recently been discussing investment contracts worth billions of dollars with the North, which would undercut the current sanctions.


mage ‘Copyleft’ by Carlos Latuff

New World Order Mind Control

Click this link .....

Fact Sheet: The Truth About the Health Care Bill

I’ll be on the new CNN show with Jon King that premieres at noon ET, available for live stream here — jh

The Firedoglake health care team has been covering the debate in congress since it began last year. The health care bill will come up for a vote in the House on Sunday, and as Nancy Pelosi works to wrangle votes, we’ve been running a detailed whip count on where every member of Congress stands, updated throughout the day.

We’ve also taken a detailed look at the bill, and have come up with 18 often stated myths about this health care reform bill.

Real health care reform is the thing we’ve fought for from the start. It is desperately needed. But this bill falls short on many levels, and hurts many people more than it helps.

A middle class family of four making $66,370 will be forced to pay $5,243 per year for insurance. After basic necessities, this leaves them with $8,307 in discretionary income — out of which they would have to cover clothing, credit card and other debt, child care and education costs, in addition to $5,882 in annual out-of-pocket medical expenses for which families will be responsible. Many families who are already struggling to get by would be better off saving the $5,243 in insurance costs and paying their medical expenses directly, rather than being forced to by coverage they can’t afford the co-pays on.

In addition, there is already a booming movement across the country to challenge the mandate. Thirty-three states already have bills moving through their houses, and the Idaho governor was the first to sign it into law yesterday. In Virginia it passed through both a Democratic House and Senate, and the governor will sign it soon. It will be on the ballot in Arizona in 2010, and is headed in that direction for many more. Republican senators like Dick Lugar are already asking their state attorney generals to challenge it. There are two GOP think tanks actively helping states in their efforts, and there is a booming messaging infrastructure that covers it beat-by-beat.

Whether Steny Hoyer believes the legality of the bill will prevail in court or not is moot, it could easily become the "gay marriage" of 2010, with one key difference: there will be no one on the other side passionately opposing it. The GOP is preparing to use it as a massive turn-out vehicle, and it not only threatens representatives in states like Florida, Colorado and Ohio where these challenges will likely be on the ballot — it threatens gubernatorial and down-ticket races as well. Artur Davis, running for governor of Alabama, is already being put on the spot about it.

While details are limited, there is apparently a "Plan B" alternative that the White House was considering, which would evidently expand existing programs — Medicaid and SCHIP. It would cover half the people at a quarter of the price, but it would not force an unbearable financial burden to those who are already struggling to get by. Because it creates no new infrastructure for the purpose of funneling money to private insurance companies, there is no need for Bart Stupak’s or Ben Nelson’s language dealing with abortion — which satisfies the concerns of pro-life members of Congress, as well as women who are looking at the biggest blow to women’s reproductive rights in 35 years with the passage of this bill. Both programs are already covered under existing law, the Hyde amendment.

But perhaps most profoundly, the bill does not mandate that people pay 8% of their annual income to private insurance companies or face a penalty of up to 2% — which the IRS would collect. As Marcy Wheeler noted in an important post entitled "Health Care on the Road to NeoFeudalism," we stand on the precipice of doing something truly radical in our government, by demanding that Americans pay almost as much money to private insurance companies as they do in federal taxes:

When this passes, it will become clear that Congress is no longer the sovereign of this nation. Rather, the corporations dictating the laws will be.

I understand the temptation to offer 30 million people health care. What I don’t understand is the nonchalance with which we’re about to fundamentally shift the relationships of governance in doing so.

We started down a dangerous road with Wall Street banks in the early 90s, allowing them to flood our political system with money and write our laws so that taxpayers would subsidize their profits, assume their losses and remove themselves from the necessity of competition. By funneling so much money into the companies who created the very problems we are now attempting to address, we further empower them to hijack our legislative process and put more than just our health care system at risk. We risk our entire system of government.

Congress may be too far down the road with this bill to change course and save themselves — and us. But before Democrats cast this vote, which could endanger not only their Congressional majority but their ability to "fix" things later on, they should consider the first rule of patient safety: first, do no harm.



1. This is a universal health care bill.

The bill is neither universal health care nor universal health insurance.

Per the CBO:

  • Total uninsured in 2019 with no bill: 54 million
  • Total uninsured in 2019 with Senate bill: 24 million (44%)
2. Insurance companies hate this bill

This bill is almost identical to the plan written by AHIP, the insurance company trade association, in 2009.

The original Senate Finance Committee bill was authored by a former Wellpoint VP. Since Congress released the first of its health care bills on October 30, 2009, health care stocks have risen 28.35%.

3. The bill will significantly bring down insurance premiums for most Americans.

The bill will not bring down premiums significantly, and certainly not the $2,500/year that the President promised.

Annual premiums in 2016, status quo / with bill:

Small group market, single: $7,800 / $7,800

Small group market, family: $19,300 / $19,200

Large Group market, single: $7,400 / $7,300

Large group market, family: $21,100 / $21,300

Individual market, single: $5,500 / $5,800*

Individual market, family: $13,100 / $15,200*

4. The bill will make health care affordable for middle class Americans.
The bill will impose a financial hardship on middle class Americans who will be forced to buy a product that they can’t afford to use.

A family of four making $66,370 will be forced to pay $5,243 per year for insurance. After basic necessities, this leaves them with $8,307 in discretionary income — out of which they would have to cover clothing, credit card and other debt, child care and education costs, in addition to $5,882 in annual out-of-pocket medical expenses for which families will be responsible.

5. This plan is similar to the Massachusetts plan, which makes health care affordable. Many Massachusetts residents forgo health care because they can’t afford it.

A 2009 study by the state of Massachusetts found that:

  • 21% of residents forgo medical treatment because they can’t afford it, including 12% of children
  • 18% have health insurance but can’t afford to use it
6. This bill provide health care to 31 million people who are currently uninsured.

This bill will mandate that millions of people who are currently uninsured must purchase insurance from private companies, or the IRS will collect up to 2% of their annual income in penalties. Some will be assisted with government subsidies.
7. You can keep the insurance you have if you like it.
The excise tax will result in employers switching to plans with higher co-pays and fewer covered services.

Older, less healthy employees with employer-based health care will be forced to pay much more in out-of-pocket expenses than they do now.

8. The "excise tax" will encourage employers to reduce the scope of health care benefits, and they will pass the savings on to employees in the form of higher wages.

There is insufficient evidence that employers pass savings from reduced benefits on to employees.

9. This bill employs nearly every cost control idea available to bring down costs.

This bill does not bring down costs and leaves out nearly every key cost control measure, including:
  • Public Option ($25-$110 billion)
  • Medicare buy-in
  • Drug reimportation ($19 billion)
  • Medicare drug price negotiation ($300 billion)
  • Shorter pathway to generic biologics ($71 billion)
10. The bill will require big companies like WalMart to provide insurance for their employees

The bill was written so that most WalMart employees will qualify for subsidies, and taxpayers will pick up a large portion of the cost of their coverage.
11. The bill "bends the cost curve" on health care.

The bill ignored proven ways to cut health care costs and still leaves 24 million people uninsured, all while slightly raising total annual costs by $234 million in 2019.

"Bends the cost curve" is a misleading and trivial claim, as the US would still spend far more for care than other advanced countries.

In 2009, health care costs were 17.3% of GDP.

Annual cost of health care in 2019, status quo: $4,670.6 billion (20.8% of GDP)

Annual cost of health care in 2019, Senate bill: $4,693.5 billion (20.9% of GDP)

12. The bill will provide immediate access to insurance for Americans who are uninsured because of a pre-existing condition. Access to the "high risk pool" is limited and the pool is underfunded. It will cover few people, and will run out of money in 2011 or 2012

Only those who have been uninsured for more than six months will qualify for the high risk pool. Only 0.7% of those without insurance now will get coverage, and the CMS report estimates it will run out of funding by 2011 or 2012.

13. The bill prohibits dropping people in individual plans from coverage when they get sick. The bill does not empower a regulatory body to keep people from being dropped when they’re sick.

There are already many states that have laws on the books prohibiting people from being dropped when they’re sick, but without an enforcement mechanism, there is little to hold the insurance companies in check.

14. The bill ensures consumers have access to an effective internal and external appeals process to challenge new insurance plan decisions. The "internal appeals process" is in the hands of the insurance companies themselves, and the "external" one is up to each state.
Ensuring that consumers have access to "internal appeals" simply means the insurance companies have to review their own decisions. And it is the responsibility of each state to provide an "external appeals process," as there is neither funding nor a regulatory mechanism for enforcement at the federal level.
15. This bill will stop insurance companies from hiking rates 30%-40% per year.

This bill does not limit insurance company rate hikes. Private insurers continue to be exempt from anti-trust laws, and are free to raise rates without fear of competition in many areas of the country.
16. When the bill passes, people will begin receiving benefits under this bill immediately

Most provisions in this bill, such as an end to the ban on pre-existing conditions for adults, do not take effect until 2014.

Six months from the date of passage, children could not be excluded from coverage due to pre-existing conditions, though insurance companies could charge more to cover them. Children would also be allowed to stay on their parents’ plans until age 26. There will be an elimination of lifetime coverage limits, a high risk pool for those who have been uninsured for more than 6 months, and community health centers will start receiving money.

17. The bill creates a pathway for single payer.

Bernie Sanders’ provision in the Senate bill does not start until 2017, and does not cover the Department of Labor, so no, it doesn’t create a pathway for single payer.

Obama told Dennis Kucinich that the Ohio Representative’s amendment is similar to Bernie Sanders’ provision in the Senate bill, and creates a pathway to single payer. Since the waiver does not start until 2017, and does not cover the Department of Labor, it is nearly impossible to see how it gets around the ERISA laws that stand in the way of any practical state single payer system.

18 The bill will end medical bankruptcy and provide all Americans with peace of mind.

Most people with medical bankruptcies already have insurance, and out-of-pocket expenses will continue to be a burden on the middle class.
  • In 2009, 1.5 million Americans declared bankruptcy
  • Of those, 62% were medically related
  • Three-quarters of those had health insurance
  • The Obama bill leaves 24 million without insurance
  • The maximum yearly out-of-pocket limit for a family will be $11,900 (PDF) on top of premiums
  • A family with serious medical problems that last for a few years could easily be financially crushed by medical costs

*Cost of premiums goes up somewhat due to subsidies and mandates of better coverage. CBO assumes that cost of individual policies goes down 7-10%, and that people will buy more generous policies.


  1. March 11, Letter from Doug Elmendorf to Harry Reid (PDF)
  2. The AHIP Plan in Context, Igor Volsky;Max Baucus WellPoint/Liz Fowler Plan" rel="bookmark" href=""> The Max Baucus WellPoint/Liz Fowler Plan, Marcy Wheeler
  3. CBO Score, 11-30-2009
  4. "Affordable" Health Care, Marcy Wheeler
  5. Gruber Doesn’t Reveal That 21% of Massachusetts Residents Can’t Afford Health Care, Marcy Wheeler; Massachusetts Survey (PDF)
  6. Health Care on the Road to Neo-Feudalism, Marcy Wheeler
  7. CMS: Excise Tax on Insurance Will Make Your Insurane Coverage Worse and Cause Almost No Reduction in NHE, Jon Walker
  8. Employer Health Costs Do Not Drive Wage Trends, Lawrence Mishel
  9. CBO Estimates Show Public Plan With Higher Savings Rate, Congress Daily; Drug Importation Amendment Likely This Week, Politico; Medicare Part D IAF; A Monopoloy on Biologics Will Drain Health Care Resources, Lancet Student
  10. MaxTax Is a Plan to Use Our Taxes to Reward Wal-Mart for Keeping Its Workers in Poverty, Marcy Wheeler
  11. Estimated Financial Effects of the "Patient Protection and Affordable Care Act of 2009," as Proposed by the Senate Majority Leader on November 18, 2009, CMS (PDF)
  12. ibid
  13. ibid
  14. ibid
  15. Health insurance companies hang onto their antitrust exemption, Protect Consumer
  16. What passage of health care reform would mean for the average American, DC Examiner
  17. How to get a State Single Payer Opt-Out as Part of Reconciliation, Jon Walker
  18. Medical bills prompt more than 60 percent of U.S. bankruptcies,; The Patient Protection and Affordable Care Act Section‐by‐Section Analysis (PDF)

America's 'Houdini Recovery' Under IMF-Type Austerity

It's what economist David Rosenberg calls recovery given plenty of supportive evidence, including:
-- over five million homeowners behind on their mortgage payments;
-- at record levels, foreclosures are alarmingly high; moreover, "the foreclosure pipeline is enormous;"
-- "housing, the quintessential leading indicator," turning lower again in starts, sales and prices;
-- instead of a normal 5 - 6 months home supply, the market has a 21 month overhang, including shadow inventory from the foreclosure pipeline;
-- mortgage applications for new home purchases down 13.9% on top of last year's 29.4%;
-- over six million Americans unemployed for at least six months, "a record 40% of the ranks of the joblessness;"
-- over 11 million full-time jobs lost since late 2007, and well over four and a half million since Obama took office, despite pledging to create them;
-- millions of jobs lost despite massive economic stimulus, and when it slows, watch out;
-- a federal deficit over 10% of GDP, twice the 1930s ratio;
--private capital growing at its slowest rate in nearly two decades;
-- 30% of manufacturing capacity idle;
-- 19 million vacant residential housing units - about 15% of the total;
-- one in six Americans unemployed or underemployed;
-- the adult male employment-to-population ratio at a record low 67% compared to 73% when the recession began;
-- at this stage of the economic cycle (two and a half years after Fed easing began), employment typically expands at least 150,000 per month; instead, it's still contracting, the level is 8.4 million lower than before the recession began, and the economy is 12 million jobs shy of full employment, a gap that will take years of sustainable growth to close;
-- commercial real estate values down 30% in the past year and falling;
-- the average American worker $100,000 poorer (including loss of home equity), even with the stock market rally;
-- bank credit contracting at an unprecedented 15% annual rate this year "as lenders sit on a record $1.3 trillion in cash;"
-- collapsed commercial and industrial loans;
-- Falling Gross Domestic Income, approaching an annualized minus 4% compared to the 1982 recessionary low of plus 4% and 2001 low of plus 2%; "the discrepancy between the income and spending accounts has never been so wide as" today; and
-- unit labor costs down 4.7% in the past year, meaning workers earn and spend less.
Conclusion - "the era of 'green shoots' is officially dead." Now you see them, now you don't because they never were there in the first place.
A recent issue of the Economist magazine asked "Why Is the recovery jobless? Maybe because it isn't a recovery," with no lack of supportive evidence. "In February, for the twenty-fifth time in 26 months, the American economy shed jobs," and beneath the surface it's much worse.
The official 9.7% headline number (so-called U-3; U-6, including discouraged workers, is 16.8%) obscures the true figure, what economist John Williams calculates at 21.6%, minus the manipulated deception. The Economist concludes that "the American economy simply hasn't been doing as well as the output figures have suggested."
Take GDP, for example. Rosenberg explains that Q 4's 5.9% growth "came in two non-recurring items - inventories and capital spending (the former a temporary alignment of stocks with sales and the latter a late-year rush to take advantage of some tax goodies)."
Those aside, the economy slowed to less than 1%, may be revised lower, and the two headline figures won't likely repeat, given a wealth of depressing data, including retail sales. The headline February 0.3% (0.8% minus autos) rise beat an expected 0.2% decline.
However, the raw data paints a different picture - minus 1.6% month-over-month in February (a month when rises usually occur) or four times as bad as the norm, and worst February in 12 years.
This (says Rosenberg) in spite of "the greatest stimulus experience in seven decades, and retail sales are still down 5% from the pre-recession peak and on a per capita basis 8%." They're lower than in January 2006 despite a 4.3% larger population, and adjusted for inflation, they're down to 1996 levels on a per capita basis.
Some recovery, and little wonder the latest Conference Board consumer confidence survey showed only 6.2% of the public thinks business conditions are good - a record low.
As a result, several presidential tracking polls have Obama at from 44 - 49%, down from 68% in January 2009, and for Congress it's worse at around about 30%. If conditions worsen, expect further erosion, and if an economic storm erupts, they may crash.
Money Creation Madness
Through September 2008, it took the Fed nearly 14 years to double bank reserves. Bernanke did it again in less than four months, swapping good assets for bad ones, bank held toxic junk, but only a small fraction of their total holdings, so the big ones remain insolvent.
Bailouts and massive borrowing are crowding out the private sector, making it hard to impossible for most businesses and consumers to borrow. In his March 15 commentary titled, "The Great Credit Squeeze," financial expert and investor safety advocate Martin Weiss explains the dangers:
-- total government borrowing (federal, state and local) at an annual pace of over $1 trillion; while
-- businesses reduced existing debts at a near $1.1 trillion annual rate; and
-- consumers virtually shut out entirely from credit markets "cut(ting) their existing mortgages at the annual rate of $365.1 billion and their consumer credit at the rate of $145.3 billion," totaling an annualized $510.4 billion cutback.
Confirming the ongoing record bank credit contraction, "credit (overall) is actually being sucked out of the consumer and corporate economy at a torrid pace." The real economy is starved because of massive government borrowing fueling a potential sovereign debt crisis like in Iceland, Greece, and Eastern Europe, and threatening Portugal, Ireland, Italy, Spain, the UK, and America.
Author Niall Ferguson sees three possible Greek outcomes, potentially affecting all heavily indebted countries:
-- "one of the most excruciating fiscal squeezes in modern European history;
--outright default; (or)
-- some kind of bailout," but he omitted the one chosen as a long-term fix - the imposition of IMF austerity, including deficit reduction through:
-- large government layoffs;
-- a public sector 10% wage cut, including a 30% reduction in salary entitlements;
-- a 20% cut in civil service bonuses;
-- freezing pensions;
-- a two-year increase in the average retirement age;
-- increasing the current 19% value added tax to 21%;
-- higher fuel, alcohol, tobacco, and luxury goods taxes; and it's only the beginning with more painful measures to come.
IMF chief economist Olivier Blanchard warns that high-debt countries like Greece face budget squeezes for a decade or two, requiring "painful sacrifices". Of concern is that spreading Greek troubles threaten a very dicey situation in Europe, America, and elsewhere - the reason David Rosenberg calls today's crisis:
"a depression because (post-WW II) recessions were merely small backward steps in an inventory cycle but in the context of expanding credit. Whereas now, we are in a prolonged period of credit contraction, especially as it relates to households and small businesses."
It's why financial expert Bob Chapman says America's financial system "is on the edge of default," and public anger is growing, a recent poll showing "92% of those surveyed wanted to unseat their current representative or Senator....and only 21% believe that government enjoyed the consent of the governed."
Given bipartisan criminality, a president beholden to power, a Congress long ago bought and paid for, and the notion of a government of, by and for the people ludicrous, but not funny given growing unaddressed human desperation - about to worsen when the full Obama package becomes law, including worsening a dysfunctional healthcare system, destroying public education, putting the Fed (Wall Street) in charge of financial reform and consumer protection, and imposing IMF-style austerity.
IMF Austerity Arriving in America
It's not coming. It's here, being incrementally rolled out, including painful structural adjustments - some legislated, others unavoidable like the possibility suggested in Jonathan Laing's March 15 article, titled "The $2 Trillion Hole" in public-employee retirement plans.
About 80% of them are defined benefit plans, meaning monthly payments are guaranteed, but can insolvent states and municipalities comply, especially given years of under-funding, fewer contributing workers at lower pay, and continuing large budget cuts, including mass layoffs and reduced benefits making a bad situation worse.
Enough for University of Chicago finance professor Robert Novy-Marx and Northwestern University's Joshua Rauh to estimate a $3 trillion + pension funding gap for states alone, and if economic conditions worsen, who knows how much higher, or if millions of retirees will, in fact, get promised benefits, despite guarantees and taxpayers hit for the shortfall.
Corporations renege on Defined Benefit Pension Plans (DBPP) by cutting benefits, switching to Defined Contribution Pension Plans (DCPP), or going bankrupt and eliminating them entirely with the help of obliging courts. So why not states and municipalities, especially given to how close to the edge they are, forcing once unthinkable actions with sweeping consequences.
What's happening regionally and locally arrived in America from reckless policies creating unsustainable rising debt levels - "debt peonage" for economist Michael Hudson that "can't be repaid." It's the core problem, and no evidence shows "countries simply grow out of their debts," according to University of Maryland Professor Carmen Reinhart and Harvard's Kenneth Rogoff, or borrow their way out for Michael Hudson. When the going gets tough, some default, others inflate, but most rely on spending cuts and higher taxes, making people pay for political indiscretions - make that crimes.
Washington may impose higher taxes and devalue the dollar, but mostly expect benefit cuts, the idea being to end core ones including Medicare, Social Security, eventually Medicaid, plus others millions rely on but won't get if tough measures are enacted. Expect them. Some are here. Others are coming through the same structural adjustments imposed on developing countries and just as painful and destructive.
One calls structural adjustment programs (SAPs) "a series of economic policies designed to reduce the role of government," replacing its obligations with market incentives - in other words, privatize. calls it "change effected in the basic framework of an economy by the impact of policy reforms, such as 'liberalization' of the economy by reducing protectionism and state intervention" - in other words, what government does, business does better so let it.
It's pure Chicago School fundamentalism, Milton Friedman (1912 - 2006) its leading advocate for public wealth in private hands, unrestrained accumulation of profits, abolition of corporate taxes, and social services curtailed or ended. He called economic freedom an end to itself; opposed minimum wages, unions and an egalitarian society; supported a flat tax for the rich; wanted Social Security and Medicare abolished; believed private schools should replace public ones; wanted everyone to be on their own "free to choose;" and called profit-making the essence of democracy - a dark world view harmful to the majority and devastating to the poor and disadvantaged, characterized by SAP harshness.
They benefit capital, not people, and the more severe, the greater the harm. They're a package of wage and benefit cuts, mass layoffs, privatization of government services, deregulation, de-unionization, currency devaluation, free capital flows, market-based pricing, free (not fair) trade, environmental harm, and at least one other few know about.
A provision in the 2008 Farm Bill lets Washington withhold up to 15% of Social Security and disability benefits from anyone with outstanding government debts, no matter how old. It applies to farm and small business loans, unpaid or disputed taxes, health care amounts veterans owe, and other government debt, potentially affecting millions late in life when they can least afford it.
Overall, the effects are devastating, including growing poverty, inequality, the destruction of the middle class and unions, hunger, homelessless, environmental harm, and police state measures to quell dissent - the essence of tyranny showing up in America and arriving at a fast clip.
Barack Obama - Neoliberal Neocon
As a candidate, he promised change, a new course, sweeping government reforms, addressing people needs, and "ensur(ing) that the hopes and concerns of average Americans speak louder in Washington than the hallway whispers of high-priced lobbyists...."
As president, he's for business as usual, not the public. Besides unbridled militarism, imperial wars, handouts to the rich, shocking lawlessness, embracing torture, political persecutions, illegal spying, and police state rule, he ignores growing poverty, joblessness, homelessness, human despair, and budget-strapped states in favor of a discretionary spending freeze from 2011 through 2013, amounting to one-sixth of the budget. Defense, national security, and business needs remain unconstrained.
That was his State of the Union message, followed up by Executive Order (EO) 13531 on February 18 titled, "National Commission on Fiscal Responsibility and Reform." In other words, soak the poor. Enrich the wealthy, the way it always works, mostly in recent decades, especially since 2000, and more than ever under Obama - central casting's poster child for power.
His EO charges the Commission with "improv(ing) fiscal sustainability over the long run (and) balanc(ing) the budget" by 2015, - impossible given trillion dollar + annual deficits as far as the eye can see. Its real aim is to dehumanize America, strip off its democratic veneer, and transform it full-blown into Guatemala, Honduras, or occupied Iraq, Afghanistan, or Palestine through imposed austerity enforced by militarized repression.
As for "fiscal responsibility," financial writer Ellen Brown calls it fear-mongering code language for:
"delivering public monies into private hands and raising taxes on the already-squeezed middle class," not a measure "to save the country from bankruptcy."
She quoted Professor Carroll Quigley from his 1966-published "Tragedy and Hope: A History of the World in Our Time," saying:
Financial capitalism's "far-reaching aim (is) to create a world system of financial control in private hands able to dominate the political system of each country and (world) economy....This system (aims for control) in a feudalist fashion by (world) central banks....acting in concert, by secret agreements arrived at in frequent private meetings and conferences."
He was prescient, former high-level government and business insider, Catherine Austin Fitts revealing "a financial coup d'etat," including engineering a "fraudulent housing and debt bubble, illegally shift(ing) vast amounts of capital" offshore, and "us(ing) privatization as a form of piracy - a pretext to move government assets to private investors at below-market prices and then shift private liabilities back to government at no cost to the private liability holder."
It's a government-business cabal to suck wealth from the many to the few, and from the wreckage propose reform, meaning sweeping austerity and greater than ever top down control, in America and globally - a cynical scheme using populist rhetoric and "slow burn" tactics for what Michael Parenti described in his 2002 "Global Rollback" article, saying:
"Throughout history (ruling classes most of all have wanted) all the choice lands, forests, game, herds, harvests, mineral deposits and precious metals of the earth; all the wealth, riches, and profitable returns; all the productive facilities; all the gainful inventiveness, and technologies; all the surplus value produced by human labor; all the control positions of the state and other major institutions; all public supports and subsidies, privileges and immunities; all the protections of the law with none of the constraints; all the services, comforts, luxuries, and advantages of civil society with none of the taxes and costs. Every ruling class has wanted only this: all the rewards and none of the burdens."
As their faithful servants, Barack Obama, Congress, and the courts are delivering the whole package, or, in other words, poverty for the many and unlimited wealth and privilege for the power elite. When will enough concerned people act in their own self interest to stop them?
Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at
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