December 14, 2011 | AP
Thursday, December 15, 2011
Wednesday, December 14, 2011
No debating it: In education, class matters
In statistics, this is a slam-dunk correlation:
Data from the National Assessment of Educational Progress show that more than 40 percent of the variation in average reading scores and 46 percent of the variation in average math scores across states is associated with variation in child poverty rates.
But I know you conservatives and "school choice" folks eschew statistics and prefer anecdotes about that one charter school, or some movie about over-achieving minority students, when it comes to U.S. education policy.
It's too bad our public and private schools don't teach statistics to over-achieving white kids....
By Helen F. Ladd and Edward B. Fiske
December 11, 2011 | New York Times
Sunday, December 11, 2011
Drumroll, please: And the new Fed bailout total is....
... $29.6 trillion and counting. Lovely. Viva el capitalismo!
Please remember this $ figure the next time you or one of our crotchety conservative friends feels the urge to complain about the Solyndra loan guarantee ($500 million), Detroit-automotive bailouts ($65 billion), or extended unemployment benefits ($60 billion). If you have any sense of consistency, fairness, humanity or just basic arithmetic, then please stop your bitching and join up with others who acknowledge the sad truth that Wall Street runs our government and our central bank for its own benefit.
By Barry Ritholtz
December 9, 2011 | Ritholtz.com
There is a fascinating new study coming out of the Levy Economics Institute of Bard College. Its titled "$29,000,000,000,000: A Detailed Look at the Fed's Bail-out by Funding Facility and Recipient" by James Felkerson. The study looks at the lending, guarantees, facilities and spending of the Federal Reserve.
The researchers took all of the individual transactions across all facilities created to deal with the crisis, to figure out how much the Fed committed as a response to the crisis. This includes direct lending, asset purchases and all other assistance. (It does not include indirect costs such as rising price of goods due to inflation, weak dollar, etc.)
The net total? As of November 10, 2011, it was $29,616.4 billion dollars — (or 29 and a half trillion, if you prefer that nomenclature). Three facilities—CBLS, PDCF, and TAF— are responsible for the lion's share — 71.1% of all Federal Reserve assistance ($22,826.8 billion).
One comment about some of the folks pushing back against this massive total: Yes, there is a big difference between a $100 lent for 3 days, and a $100 lent overnight rolled over 2 more times. And there is an enormous difference when temporary overnight lending lasts for three years.
Overnight lending, by its definition, is temporary, short term, lower risk, modest impact. It exists to allow slightly over-extended banks to meet their reserve requirements. But rolling overnight lending repeatedly for 3 years is none of those things. And it makes a mockery of these same reserve requirements, and the protective purposes they are supposed to serve.
The amount of overnight lending reflects how broken our financial system really is. A well capitalized, moderately leverage system does not require this massive liquidity from a central bank — interbank lending should be sufficient. What the data reveals is that the financial sector remains dangerously under-capitalized and overleveraged.
[Oh, p-shaw. Leverage is great! Leverage is the best! How else can you make loads of cash without work or increased productivity? This Ritholtz guy obviously doesn't understand high finance.... - J]
To pretend these were merely minor overnight loans, rolled over once or twice, is foolish, dangerous nonsense.
---------
Cumulative facility totals, in billions
Source: Federal Reserve
| Facility | Total | Percent of total |
| Term Auction Facility | $3,818.41 | 12.89% |
| Central Bank Liquidity Swaps | 10,057.4(1.96) | 33.96 |
| Single Tranche Open Market Operation | 855 | 2.89 |
| Terms Securities Lending Facility and Term Options Program | 2,005.7 | 6.77 |
| Bear Stearns Bridge Loan | 12.9 | 0.04 |
| Maiden Lane I | 28.82(12.98) | 0.10 |
| Primary Dealer Credit Facility | 8,950.99 | 30.22 |
| Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility | 217.45 | 0.73 |
| Commercial Paper Funding Facility | 737.07 | 2.49 |
| Term Asset-Backed Securities Loan Facility | 71.09(.794) | 0.24 |
| Agency Mortgage-Backed Security Purchase Program | 1,850.14(849.26) | 6.25 |
| AIG Revolving Credit Facility | 140.316 | 0.47 |
| AIG Securities Borrowing Facility | 802.316 | 2.71 |
| Maiden Lane II | 19.5(9.33) | 0.07 |
| Maiden Lane III | 24.3(18.15) | 0.08 |
| AIA/ ALICO | 25 | 0.08 |
| Totals | $29,616.4 | 100.0% |
Source:
BERNANKE'S OBFUSCATION CONTINUES: THE FED'S $29 TRILLION BAIL-OUT OF WALL STREET
By L. Randall Wray
December 9, 2011 | Economonitor
URL: http://www.economonitor.com/lrwray/2011/12/09/bernanke's-obfuscation-continues-the-fed's-29-trillion-bail-out-of-wall-street/
Monday, December 5, 2011
CBS investigates: Why no prosecutions of Wall St.?
All of you who think the FMs caused the mortgage crisis, you need to read this. Countrywide and Citibank both engaged in deliberate mortgage fraud. No regulator in the world can prevent the kind of fraud they perpetrated -- regulators can only prosecute them when it's uncovered. It has been uncovered. Whistleblowers from both companies are ready to testify. Yet the Justice Department hasn't opened a criminal investigation and made charges. Why not?
Is it because politicians -- including Obama -- are in the bankers' pocket? Or are federal prosecutors just afraid they'll be outgunned by dozens of high-priced lawyers? Whatever the excuse, it's not good enough. We put executives behind bars for S&L fraud, and that was mild compared to this. We need criminal cases and CEOs and CFOs behind bars, and we can do it using the 2002 Sarbanes Oxley Act.
December 4, 2011 | CBS News
VC millionaire: Raise taxes on 1% to help true job creators
Hear hear!
By Nick Hanauer
December 1, 2011 | Bloomberg Businessweek
It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.
Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn't, and we aren't. The conventional wisdom that the rich and businesses are our nation's "job creators" is every bit as false.
I'm a very rich person. As an entrepreneur and venture capitalist, I've started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc.
Even so, I've never been a "job creator." I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.
That's why I can say with confidence that rich people don't create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.
Theory of Evolution
When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it's the other way around.
It is unquestionably true that without entrepreneurs and investors, you can't have a dynamic and growing capitalist economy. But it's equally true that without consumers, you can't have entrepreneurs and investors. And the more we have happy customers with lots of disposable income, the better our businesses will do.
That's why our current policies are so upside down. When the American middle class defends a tax system in which the lion's share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer.
And that's what has been happening in the U.S. for the last 30 years.
Since 1980, the share of the nation's income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the superwealthy fell to 16.6 percent in 2007, from 42 percent at the peak of U.S. productivity in the early 1960s, and about 30 percent during the expansion of the 1990s. In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.
One reason this policy is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don't buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.
It's true that we do spend a lot more than the average family. Yet the one truly expensive line item in our budget is our airplane (which, by the way, was manufactured in France by Dassault Aviation SA), and those annual costs are mostly for fuel (from the Middle East). It's just crazy to believe that any of this is more beneficial to our economy than hiring more teachers or police officers or investing in our infrastructure.
More Shoppers Needed
I can't buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can't buy any new clothes or enjoy any meals out. Or to make up for the decreasing consumption of the tens of millions of middle-class families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.
If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It's worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.
It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again. Shifting the burden from the 99 percent to the 1 percent is the surest and best way to get our consumer-based economy rolling again.
Significant tax increases on the about $1.5 trillion in collective income of those of us in the top 1 percent could create hundreds of billions of dollars to invest in our economy, rather than letting it pile up in a few bank accounts like a huge clot in our nation's economic circulatory system.
Consider, for example, that a puny 3 percent surtax on incomes above $1 million would be enough to maintain and expand the current payroll tax cut beyond December, preventing a $1,000 increase on the average worker's taxes at the worst possible time for the economy. With a few more pennies on the dollar, we could invest in rebuilding schools and infrastructure. And even if we imposed a millionaires' surtax and rolled back the Bush- era tax cuts for those at the top, the taxes on the richest Americans would still be historically low, and their incomes would still be astronomically high.
We've had it backward for the last 30 years. Rich businesspeople like me don't create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That's why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.
So let's give a break to the true job creators. Let's tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let's remember that capitalists without customers are out of business.
(Nick Hanauer is a founder of Second Avenue Partners, a venture capital company in Seattle specializing in early state startups and emerging technology. He has helped launch more than 20 companies, including aQuantive Inc. and Amazon.com, and is the co-author of two books, "The True Patriot" and "The Gardens of Democracy.")
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