Day: November 24, 2008

And In This Corner–Team Obama

Obama made his comments as he unveiled the top members of his economic team, beginning with New York Federal Reserve President Tim Geithner to be his treasury secretary. Geithner, 47, is a veteran of financial crises at home and overseas and has worked closely with the Bush administration in recent months.

Obama chose Lawrence Summers as director of his National Economic Council. Summers was treasury secretary under former President Bill Clinton.

Obama said his newly minted economic team offered “sound judgment and fresh thinking” at a time of economic peril.

He expressed confidence the nation would weather the crisis “because we’ve done it before.”

Obama also announced two other members of his economic team in the making. He named Christina Romer as chair of his Council of Economic Advisers, and Melody Barnes as director of his White House Domestic Policy Council.

Obama declined to say how large a stimulus package he wants from Congress. Democratic lawmakers speculated over the weekend that the price tag could reach $700 billion over two years as the nation struggles to emerge from a recession compounded by a credit crunch. “It’s going to be costly,” the president-elect said.

He has chosen centrists for the team….people who will try to make sure that all remains the same on Wall Street.

Market Reform

I was sent this piece in an email from a friend in Oregon and I wanted to see what others thought of the ideas contained within it.

Reforms are needed and change is needed there are ways to do this.  But will anyone be up to the challenge?

1. The market mechanism is an effective control device for a myriad of unimportant decisions, and as an arbiter of the economic value of a commodity. But it fails important equity, efficiency, and stability tests.

2. A sophisticated, complex and dynamic financial system such as ours must play an essential role in enabling scientific and technological revolutions to emerge, be tested, and successfully be deployed throughout society. However, this process is inherently so destabilizing that serious depressions and greatly aggravated class conflict are its natural consequence. Thus: finance cannot be left to free markets.
3. Decentralized markets are particularly unstable and inefficient for an economy in which capital investment constitutes a significant portion of private national product, and investment goods are expensive to produce.

4. Under capitalism, financial resources will not be risked on large-scale, long-lived capital assets without protection against market forces. Public control, if not outright ownership, of large-scale capital intensive production units is essential.

5. The greater stability comes from the counter-cyclical impact of government deficits in stabilizing profits. However, if a MORE SOCIALIST form of capitalism is not going to be inflationary, its government must have the taxing and fiscal authority to hold back profits through budget SURPLUSES when and if inflation rises.

6. The historical emphasis (since the New Deal) on investment and “economic growth” rather than on employment as a policy objective is a mistake. A full employment economy is bound to expand, whereas an economy that aims at accelerating growth through devices that induce capital intensive private investment may grow, but will also be increasingly inequitable in its income distribution, inefficient in its choice of technologies and techniques, and unstable in its overall performance.

7. The employment strategy of a more responsive form of capitalism would be as follows:
a) The development of public, private, and in-between institutions that furnish jobs at a non-inflationary base wage, for any person laid off from the private economy.
b) Remove all barriers to labor force participation (for example social security penalties).
c) Modify the structure of transfer payments (unemployment compensation, AFDC-type payments, etc) to accommodate government as the employment of last resort.
d) Retraining privileges equivalent to military service for all.
e) Access to national health care coverage.
f) Enhanced public retirement protection.
g) In a full employment economy, compensation for increased productivity can include SHORTENING THE WORK DAY, especially in the lower third of the income scale.

The most challenging policy and administrative challenge implied in these principles is, of course, the “base wage.” By guaranteeing full employment, government effectively sets the economic floor for any and every member of society. It must take care that advances in the floor — surely the greatest promise of sustained economic productivity growth — not fall prey to the temptations of “great leaps forward,” which would lead to an inflationary spiral — and ultimately a crash.

Does anyone see these reforms working?

Israeli Neo-Nazis?

I had to read this twice to be sure I was not hallucinating.  One of the last places that I would associate Ner-Nazis with……..

Eight teenagers have been sentenced to time in jail by a court in Israel for carrying out a series of neo-Nazi attacks that shocked the nation.

The eight, aged from 16 to 19, were found guilty of attacking religious Jews, gays and drug addicts, and the desecration of a synagogue.

The group, immigrants to Israel from the former Soviet Union, were sentenced to between one and seven years in jail.

Gang leader Erik Bonite, who is also known as Ely the Nazi, was sentenced to seven years in jail, the AFP news agency reported.

“The fact that they are Jews from the ex-Soviet Union and that they had sympathised with individuals who believed in racist theories is terrible,” Judge Tsvi Gurinkel said as he handed down his verdict.

They were charged with offences including conspiracy to commit a crime, assault, racial incitement and the distribution of racist materials.

The suspects all migrated to Israel under the Law of Return, which allows anyone with at least one Jewish grandparent to become a citizen.

But their links to Judaism are slender, with most qualifying for citizenship through grandparents or distant family connections.

Assault On The American Worker

The events of the past few days have made clear that a proposed $25 billion bailout of the US Big Three auto companies is being used to intensify the ruling class offensive against auto workers and the American working class as a whole.

In an entirely cynical manner, the media and politicians of both parties are issuing pseudo-populist denunciations of General Motors, Ford and Chrysler while seizing on the near-collapse of the companies as an opening to rip up union contracts and destroy workers’ pensions, health benefits, wages and working conditions. This is to be the centerpiece of a ruthless restructuring of the industry, involving the closure of more factories and the destruction of tens of thousands more jobs. The aim is to provide, in the form of a far smaller and more highly exploitative industry, a source of profitable investment for Wall Street bankers and speculators.

The destruction of auto jobs and gutting of all that remains of the gains won by generations of auto workers since the mass sit-down strikes of the 1930s will be used as a precedent for similar attacks on workers in every sector of the economy and every part of the country. As with the Chrysler bailout of 1979-80, but on a far broader and even more brutal scale, mass unemployment will be used as a weapon to bludgeon the working class.

Whether through the bankruptcy courts or a bailout bill conditioned on unprecedented concessions—which the United Auto Workers (UAW) will accept and help impose—the workers are to be forced to labor for near-poverty wages and be stripped of basic health and retirement benefits.

President-Elect Barack Obama, for his part, has solidarized himself with demands for sweeping contract concessions, declaring that any auto bailout be contingent on the industry’s future “viability.” Among his chief economic advisers is Paul Volcker, the former Wall Street banker who was appointed chairman of the Federal Reserve by Democratic President Jimmy Cater and engineered a massive rise in unemployment, which was used to break the power of the unions and undermine the resistance of the working class to layoffs and wage cuts. The Chrysler bailout was carried out during his tenure at the Fed.

There is only one way to save the workers from the assaults they are sure to face.  And that is?

There is only one policy that can defend the interests of auto workers and the working class as a whole. That is a socialist policy of nationalizing the auto industry and transforming it into a publicly owned enterprise under the democratic control of working people. This must be carried out in conjunction with the nationalization of the banks under public control, so that economic life can be based on the principle of production for human need, not private profit.

The design, engineering and manufacture of automobiles involve tens of millions of people around the world and vast natural, financial and human resources. The only way to guarantee decent living standards for all workers and to end destructive national competition is to unite auto workers internationally on the basis of a socialist program.

I know Irene…not what you want to hear, but put yourself in the place of an autoworker….what would you do to preserve your job?

Citigroup Comes A Calling

And for the second time, Citigroup comes begging for money.

The government unveiled a bold plan Sunday to rescue Citigroup, injecting a fresh $20 billion into the troubled firm as well as guaranteeing hundreds of billions of dollars in risky assets.

The action, announced jointly by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp., is aimed at shoring up a huge financial institution whose collapse would wreak havoc on the already crippled financial system and the U.S. economy.

The sweeping plan is geared to stemming a crisis of confidence in the company, whose stock has been hammered in the past week on worries about its financial health.

Critics worry the actions could put billions of taxpayers’ dollars in jeopardy and encourage financial companies to take excessive risk on the belief that the government will bail them out of their messes.

The $20 billion cash injection by the Treasury Department will come from the $700 billion financial bailout package. The capital infusion follows an earlier one — of $25 billion — in Citigroup in which the government also received an ownership stake.

The once mighty Citigroup, which had at one time been the largest U.S. bank by assets, has seen its shares lose 60 percent of their value in the past week, reflecting a crisis of confidence among skittish investors. They are worried all the risky debt on Citigroup’s balance sheet will turn into losses as the economy worsens and the markets stay turbulent — losses that could be nearly impossible to reverse.

Clinton Gets Tough

Before Hillary Clinton has been formally offered the job as Secretary of State, a purge of Barack Obama’s top foreign policy team has begun.

The advisers who helped trash the former First Lady’s foreign policy credentials on the campaign trail are being brutally shunted aside, as the price of her accepting the job of being the public face of America to the world. In negotiations with Mr Obama this week before agreeing to take the job, she demanded and received assurances that she alone should appoint staff to the State Department. She also got assurances that she will have direct access to the President and will not have to go through his foreign policy advisers on the National Security Council, which is where many of her critics in the Obama team are expected to end up.

The first victims of Mrs Clinton’s anticipated appointment will be those who defended Mr Obama’s flanks on the campaign trail. By mocking Mrs Clinton’s claims to have landed under sniper fire in Bosnia or pouring scorn on her much-ballyhooed claim to have visited 80 countries as First Lady they successfully deflected the damaging charge that he is a lightweight on international issues.

Foremost among the victims of the purges is her old Yale Law School buddy Greg Craig, a man who more than anyone led the rescue of his presidency starting the very night Kenneth Starr’s lurid report into the squalid details of the former president’s sex scandal with Monica Lewinsky were published on the internet in 1998. Despite his long and loyal friendship with the Clintons, Mr Craig threw his lot in with Mr Obama at an early stage in the presidential election campaign. As if that betrayal to the cause of the Clinton restoration was not enough, Mr Craig did more to undermine Mrs Clinton’s claims to be a foreign policy expert than anyone else in the some of the ugliest exchanges of the battle for the Democratic nomination.

Will she be a spokesperson for Obama or herself?