Floyd Norris, who usually, so far as I can see, makes sense, notes with approval that the European Central Bank has found a way to delay the day of reckoning in Europe:
In recent weeks, the new president publicly insisted the central bank would never do any of the things that Germany opposed. The bank would not drastically step up its purchases of Spanish and Italian government bonds. It would not directly finance European governments. It would not backstop European rescue funds or print money that the International Monetary Fund could use to bail out governments.
It would do only what central banks normally do. It would lend to banks.
It turns out that may be enough to stem the European crisis for at least a few years, and go a long way to recapitalizing banks in the process.
That fact only became clear on Wednesday, although Mr. Draghi announced his intentions on Dec. 8, when the central bank said it would offer to lend money to banks for three-year terms, in unlimited amounts, at a very low rate.
In reality, it was an offer banks could not refuse. They will initially pay the central bank’s official rate of 1 percent. But if the bank lowers the rate in coming months — as it is widely expected to do — the rate on these loans will drop as well.
There is no limit on what the banks can do with the money. But there is an obvious, virtually risk-free, option. A bank can buy short-term securities of its own government and pocket the difference — up to four or five percentage points — for the life of the securities.
If there is an obvious way to use the money, then it is, we can assume, the ECB’s intent that the money should be used in precisely that way. This is, then, a backdoor way to do what it refuses to do directly: “step up its purchases of Spanish and Italian government bonds” or “backstop European rescue funds or print money that the International Monetary Fund could use to bail out governments”.
I’m no expert, but this inquiring mind wants to know why it makes any sense at all to do indirectly and inefficiently what could and should be done directly. The European banks are getting a deal pretty much like the banks here got: the government is lending them money at almost no interest, and borrowing it back at a higher rate. One might argue that in this case the banks are taking on risk the American banks never did; after all, when the American banks lent the money back to the government there was no risk of an American default.
But in reality, it is the ECB that is really taking on the risk here, and its doing it for a measly one percent return. As here, everyone knows that if push comes to shove, the ECB will step in to bail out the banks, since this “plan” is itself part of just such a bailout. So, as here, the banks are lending out money with no real risk, and pocketing the spread between their own costs and those they are passing on to the taxpayers of Europe. In essence, those taxpayers are paying a tax to the banks, and a hefty one at that. Along with getting the bill, those very taxpayers will be expected to make “sacrifices”, in the form of counterproductive austerity measures. The banks and bankers, of course, will make no sacrifices. They will get only what they’ve grown used to getting: free money. It’s a Wonderful Life if you’re a banker.
As a postscript, as even Norris acknowledges, all this maneuvering only postpones the inevitable, since it does not address the fundamental problems with the Euro. Dean Baker explains the situation succinctly:
It seems the problem here is that Robert Samuelson has not heard about the euro. The countries he has identified as reaching a situation where they “lose control over their economy” are all on the euro. These are countries that do not issue their own currency. In this sense they are like Ohio and Texas. These states cannot freely run deficits because the Federal Reserve Board has no explicit or implicit commitment to back up their debt. Greece, Italy and Spain are in the same situation, as the European Central Bank (ECB) has repeatedly insisted that it will not back up the government debt they issue.
The countries of Europe have tried to have it both ways: a unified currency without a truly unified economy. It hasn’t worked. The ECB’s response doesn’t address the underlying issue, but it does make an awful lot of rich bankers a lot richer.
Regular readers may recall that I and others were adamant that it was essential for the ECB to step in and buy the debt of troubled governments, to head off what looked very much like self-fulfilling panic. The ECB refused to do that, and many of us took that refusal at face value — but the argument is that in reality it did the functional equivalent, lending very large sums to banks with sovereign debt as collateral, so that it was in effect doing the purchases we wanted, but laundering those purchases through banks.
This could only happen in America: an organization supposedly dedicated to rooting out deception takes the position that semantics trumps reality. According to Politifact, so long as the Republicans call something Medicare the claim that they intend to end what we now know as Medicare is not only untrue, it is, among all the remarkable lies we’ve seen this year, the lie of the year. Paul Krugman tells the tale:
This is really awful. Politifact, which is supposed to police false claims in politics, has announced its Lie of the Year — and it’s a statement that happens to be true, the claim that Republicans have voted to end Medicare.
Steve Benen in the link above explains it, but let me just repeat the basics. Republicans voted to replace Medicare with a voucher system to buy private insurance — and not just that, a voucher system in which the value of the vouchers would systematically lag the cost of health care, so that there was no guarantee that seniors would even be able to afford private insurance.
The new scheme would still be called “Medicare”, but it would bear little resemblance to the current system, which guarantees essential care to all seniors.
How is this not an end to Medicare? And given all the actual, indisputable lies out there, how on earth could saying that it is be the “Lie of the year”?
One suspects that even Orwell would be surprised at this one. Krugman feels this is a question of Politifact wanting to appear to be balanced. I think the folks at Politifact got snookered by the Republican spin machine, and, when called on it, as they were months ago, they decided to dig in rather than admit their mistake. There probably is a bit of attempted balance going on. Had the wronged party been the Republicans, Politifact probably would have come clean.
Karen Buffkin of Noank has been appointed deputy secretary of the state Office of Policy and Management, replacing Mark Ojakian, who has been named chief of staff by Governor Dannel P. Malloy.
Buffkin had served as Undersecretary for Legal Affairs for OPM.
“I’m thrilled to be able to make this appointment,” OPM Secretary Ben Barnes said in a release. “I had not known Karen well when she began here a year ago, but everyone who has worked with her has been impressed by her work ethic, knowledge and administrative abilities. Her broad experience in government and as a litigator is invaluable for the type of work we do at OPM. Maybe best of all, she is a great team player and her colleagues at OPM are enthusiastic about her new position.”
For those not familiar with this area, Noank (along with parts of Mystic, Groton Long Point and the City of Groton) is part of the Town of Groton. I decline to explain further, as I have only lived here for 35 years and so have not yet had time to gain an understanding of the reasons why such inefficiency is desirable, but all the natives assure me that it is. Getting back to Karen, while her new job is certainly both impressive and well deserved, she already holds the far more prestigious position of vice-chair of the Groton Democratic Town Committee, which the Day inexplicably omitted from the linked article.
Okay, at first I figured I really should put up something Christhmasy, but then I remembered we liberals are waging war on Christmas, and anyway there’s one more Friday to go before the big day arrives. So I decided to stick to just regular music for one more week and do something seasonal next week, giving me one more week to find something that I haven’t put up in the past. There’s really not that many good videos of Christ as music that suit this feature.
Anyway, I’ve been thinking about putting up Harry Nilsson, a somewhat unappreciated songwriter from the 60s. Here he’s singing what must have been his biggest hit, which was featured in Midnight Cowboy.
According to the squibs on YouTube this is a live performance, and while I admit that he was alive at the time this was filmed, I’m not at all sure he was actually singing at the time. But I look over that, and waive my usual ban on lip syncing, because this is the best video of this song out there, and it really is a good song and deserves its moment of glory.
Ron Wyden (D? Oregon) has teamed up with Paul Ryan on a plan to destroy Medicare and deprive people my age of affordable heatlh care as we enter our “golden” years. But we can count ourselves lucky, as the plan is clearly the opening salvo toward returning those in the generation after us to the good old days, when if you wanted health care you paid yourself, bought non-existent insurance, or you died.
You can always count on the fact that there will be some Democrat out there who will take a perfectly good Democratic campaign issue and undermine it. The fact that this particular plan is also bad policy is just icing on the cake for the Republicans.
We learn here that Newt Gingrich just pledged to never ever commit adultery, among other things. Luckily, for him at least, he was not required to affirm that he had never ever committed adultery, but as the article at the link points out, this is still at least the fourth time he’s taken such a pledge, given that he took one each time he married. I suppose you could argue that he’s batting 500, which isn’t bad in baseball, but when it comes to adultery, well..most of us do better.
But I come not to condemn adultery, but to condemn pledges. The pledge Newt signed, for the Family Leader, one of many whacko groups that extract pledges from Republicans, also contains pledges about gays, abortion, imposition of Christianity on the rest of us (he’s for it), performing his Christian duty to destroy Social Security and Medicare, and overturning judicial decisions that aren’t sufficiently right wing, if he can find any.
Republicans seem to have a particular affinity for both extracting and giving such pledges. Candidates happily agree to tie their hands in advance, changed circumstances be damned. Not only that, they now find themselves in the position of actually having to keep their pledges, or Grover will come and get them, and make sure there’s no cushy lobbying job awaiting them as the door hits them on the way out.
Are there any that refuse to give these pledges, which even a child can see are irresponsible, no matter where you are on the issues? Maybe Huntsman? I suppose when you approach politics as a matter of religious dogma, rather than as an exercise in attempting to determine what works, and implementing it, then they make a tad of sense, but that’s only because you are starting from a position that itself makes no sense.
If any proof were needed that we live in an oligarchy, where sometimes the rest of us are thrown a bone, consider the “Mobile Informational Call Act of 2011“, which would amend federal law to allow corporations to pester cell phone users with robocalls. I first learned about it in a fundraising email from the Democrats. This is, we at least can hope, an example of a situation where the Democrats might actually, but probably ineffectually, play their assigned role as the party that sometimes thinks people have rights, but, we’ll see. Other than fundraising off it, they may do little to stop it.
If this were a truly representative democracy, this bill would go nowhere. How many people do you know who are clamoring to be annoyed day and night with unwanted cell phone calls? In addition, unlike with landlines, many people will have to pay to receive these calls. This basically amounts to a tax imposed by the callers, a tax that will fall heaviest on the poor, who often buy their cell phone plans by the minute. Only in a country in which corporations totally called the tune would this bill go anywhere. Even the Tea Party hasn’t managed to get its puppets to demand stuff like this.
At the same time, another bill of similar ilk has already passed the House. As the Times reports this morning, the House has passed a bill at the behest of Netflix that would make each person with a Facebook account and a Netflix account a source of free Netflix advertising. Under current law, a person’s video watching habits are protected. Oddly enough, in a round about way, we have Robert Bork to thank for that fact. Netflix wants to “allow” consumers to give a one time consent to “share” every movie they watch. No doubt this would be done by a take-it-or-leave-it change to their terms of service. Every Itunes subscriber knows the drill. Periodically we have to agree to a change in service, and we can actually try to figure out what the changes are, providing we are interested in wading through 40 or 50 pages of legalese. Netflix’s spokesman’s defense of the bill is the kind of laughable pile of BS only the American media could report with a straight face:
“It really is meant to empower the consumer to be able to share with their friends,” says David Hyman, the general counsel of Netflix. He says the bill simply updates an outmoded law so that it matches the way we live now. “It really kind of levels the playing field in social media.”
Isn’t their concern for our welfare touching? If you don’t believe him, then take it from the Future of Privacy Forum, a group which, judging by its name, is obviously devoted to protecting privacy:
People prefer frictionless sharing, a convenience hindered by the current law, says Christopher Wolf, a lawyer who is co-chairman of the Future of Privacy Forum, a Washington research group that receives financing from Google, Facebook and other digital media companies.
Did I say protecting? Sorry, that would be destroying. Again, only in an oligarchy could such a bill be considered, never mind passed by one House.
One source of rather dismal inspiration for this feature is the obituary page. This week Dobie Gray died. According to the Times he was both a singer and a songwriter, having written hits for a number of major artists.
I’ve chosen two videos, one from 1965, one from 1974. In a way they illustrate the tremendous changes that took place over the period of just nine years. From black and white to color; from fairly conservative clothes to full on 70s anything goes (and probably shouldn’t have). This first song is the In Crowd, which I believe was Gray’s first hit, which Ramsay Lewis later turned into a jazz classic.
At least the 70s can take credit for losing those background dancers.
I much prefer Drift Away to the In Crowd, which is performed here in a non lip synced version on the BBC.
A while back I had this to say about the fact that Wall Street is pouring so much money into Scott Brown’s campaign:
One must wonder how much money Wall Street will have to raise for Scott Brown to overcome the harm articles like that in today’s Times (Wall Street Rallies Around Scott Brown for Senate Race) will do. As we proved here in Connecticut in 2010, at least in the more intelligent parts of the country, after a certain amount more money produces no additional return, provided the good guy has a reasonable sum of his/her own to spend. Warren will have plenty of money, both of her own and from third party groups. If Wall Street pours in extra millions, that very fact may lose Brown more votes than the money can buy.
While 23 percent say they are less likely to vote Warren for her support of Occupy Wall Street, 37 percent say they are less likely to support Brown for receiving so many donations from Wall Street.
In other words, even though Wall Street is panicking over Warren and dumping hundreds of thousands of dollars into negative ads against her, their support for Brown is actually hurting him.
Okay, granted. Only a beltway pundit could have failed to see it coming. But in the pundit trade, even here in the boonies, the absence of failure is itself a major accomplishment.
Sometimes the stars align, and what once seems far fetched suddenly becomes possible. For years people like Dean Baker and Paul Krugman have been recommending a financial transactions tax. It brings in immense amount of revenue, discourages useless and non-productive speculation, and has negligible impact on people who are buying stocks for actual investment. Since it makes so much sense, it has of course been a non-starter, except, curiously, Britain has had one for years, and it has worked well.
Driven by populist anger at bankers as well as government needs for more revenue, the idea of a tax on trades of stocks, bonds and other financial instruments has attracted an array of influential champions, including the leaders of France and Germany, the billionaire philanthropists Bill Gates and George Soros, former Vice President Al Gore, the consumer activist Ralph Nader, Pope Benedict XVI and the archbishop of Canterbury.
…
The Robin Hood tax has also become a rallying point for labor unions, nongovernmental organizations and the Occupy Wall Street movement, which view it as a way to claw back money from the top 1 percent to help the other 99 percent. Last month, thousands of demonstrators, including hundreds in Robin Hood outfits with bright green caps and bows and arrows, flooded into southern France to urge the leaders of the Group of 20 nations to do more to help the poor, including passing a financial transactions tax.
Oddly enough, according to the article, the British PM seems to feel that such a tax would destroy the financial sector in London, even though they’ve had a fairly large tax on certain transactions for more than a century. One would think if the tax were going to drive traders from London it would have done so already.
The Obama White House, predictably, prefers to talk about a more ineffective, politically less appealing approach, which is equally impossible to get through Congress at the present time. Why appeal to your base when you can waste time trying to satisfy people who will never even accept your legitimacy? Maybe it has something to do with all those Wall Street dollars the Obama campaign is raking in.
Still, it’s good to see that this idea is gaining traction. It may be that it has high profile advocates, but for my money, it would never have come up for discussion had the Occupy movement never taken place. It’s amazing what a bunch of kids in tents and a few cops with a liberal supply of pepper spray can do.
