Category: Government Failure

Irish And Greek Bailouts Won’t Work!

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure

James Saft
James Saft writing on his blog discusses the strange bailouts of Ireland and Greece. “What’s strange?” They are unsustainable. They are disastrous. They are a bandaid that won’t hold. This essay uses the word, bizarre. That is correct.

James Pilant

From Reuters –

So let’s recap, because this is truly bizarre: Lenders to Ireland or the other troubled states won’t take a hit now but if they stick around until 2013 then they will take losses along with the taxpayers. Oh yeah, and the current round of bailouts are aimed at seeing Ireland and Greece through the next couple of years, at which point it will become extremely dangerous to lend to them, as their economies will have shrunk, their debt burdens bloomed and private lenders will be on the hook.

To add to this, the European Stability Mechanism, the name of the new fund, will be senior to all creditors except the International Monetary Fund, meaning that in the event of a bankruptcy it would be paid first. Ratings agency Fitch looked at this provision and quite rightly said that it might lead to lower ratings on shaky euro zone sovereigns.

The only way you could make this policy mix work was if you could find a very rich lender with no ability to conceptualize the future. Hmm, let’s see a rich entity with limited ability to fully imagine a future state – it must be the European Union!

Few private lenders will stick around, they will sell their bonds and the only buyers will be the EU or ECB, which itself as it understands this predicament is hugely unwilling to play along.

Germany and France are both so unwilling to both have principles and pay for them that they are refusing to act on proposals for common European bonds and are expected to resist moves to increase the size of the European Financial Stability Fund, the vehicle now being used for bailouts.

Okay, do you get it? These aren’t solutions. They are designed to tide things over until someone new is in office to take responsibility. And especially, they are designed to appear as decisive action when they are nothing of the kind.

It is important that both Greece and Ireland elect new governments charged with challenging these horrendous plans that smack only of disaster. Those countries deserve better, and their citizens should demand better terms. These are sovereign nations not American homeowners subject to the whims of banks.

Let democracies exert the power of the people, the one and only thing that banks fear.

James Pilant

Nation On Wrong Track? – COMMENT by Jayaraman Rajah Iyer

On By southwerkIn business ethics, Capitalism, ethics, Government Failure3 Comments

Jayaraman Rajah Iyer comments on one of my recent posts. Being down with a sinus infection (it’s still hanging on), I wasn’t able to do it justice in my comments, so now I remedy that by letting you all see it as a direct post.

James Pilant

Yes all nations are in the wrong track. Quote from my book:”When the priority is already set, the hungry man accepts
the inevitability of the human race which is non-reacting,
non-acting, non-responding, inert-like entity. The change that
is needed from a Government to shift the gear from
advanced technology and space exploration to a mundane
agricultural economy is a process very tough to implement in
a short notice, even if one realizes that more than a billion
people are below poverty line. Nuclear submarines,
armaments, security initiatives of trillion dollar valued
business enterprise have precedence over morality and
therefore prudence is what the government feels they should
adopt. Not because it is not the priority but effecting change
in increasing the arable lands, increasing the yield per
hectare, linking satellites facilities for better farming,
conclusion on Genetically Modified seeds, advanced
agricultural machinery, increasing the total agricultural
production etc. involve a clear long-term strategy of many
years to implement.

“The new pledge to commit $20 billion to global
agricultural development.. has the potential to dramatically
improve the livelihoods of more than 700 million of the
world’s poor living in rural areas, so says Catherine Bertini,
former executive director, UN World Food Program; and Dan
Glickman, former secretary, U.S. Department of Agriculture.”
$20 billion is a minuscule amount, given the defense
expenditure and the estimated sum tax evaders who have
effectively squirreled away between 7 and 11 trillion dollars
in safety deposit boxes and offshore bank accounts, as
Lesley Curwen reports in BBC, it gives the state of
affairs of the economy driven by forces beyond the control of
the world governments. Agricultural production gets stagnated for years but world, if ever takes cognizance of
increased production in agriculture, then the society as a
whole has to be brought into action. The canvas is much
larger, expansive, broad and comprehensive in its strategy
to execute. Without involving many in the society it is
conceptually difficult to materialize major results.”

Recent visit by Obama to India has again pushed defense equipment for sale that would at the most protect a few jobs. India is stagnated at 300 million tonnes agricultural produce for too long and there seems to be no strategy to scale up to 500 million tonnes. Leadership is very much needed lest those who remain hungry takes the leadership in their hands – at the street level.

ADAM LEVITIN…21% HAMP First Year Redefault Rate (via Foreclosureblues)

On By southwerkIn business ethics, ethics, Government Failure

Just when you thought the President’s HAMP program couldn’t be any worse, it is. I teach my classes that just when you think you’ve reached the bottom that there is always more down. Here is solid evidence from the gentlemen at Foreclosureblues.

James Pilant

ADAM LEVITIN...21% HAMP First Year Redefault Rate 21% HAMP First Year Redefault Rate Today, December 13, 2010, 1 hour ago | Adam Levitin The Congressional Oversight Panel has a new HAMP report out.  Like all COP reports, it's long and chock full o' analysis.  There's an executive summary up front, but some of the most important points are only in the report proper (especially pp. 100-111).  I think there are three big things to take away from the report: First, 21% of HAMP permanent modification … Read More

via Foreclosureblues

Nation On Wrong Track?

On By southwerkIn business ethics, ethics, Government Failure2 Comments

From Yahoo News –

A majority of Americans feel that America has is “on the wrong track,” and that they are worse off than they were in 2008.

In a sweeping poll released by Bloomberg today, 66 percent of respondents said that they felt that “things in the nation…have… gotten off on the wrong track,” compared to just 27 percent who felt the country was heading in the right direction. 51 percent of respondents said they were worse off now than they were two years ago.

We need leadership and we need someone in power whose first concern is the welfare of the middle class. Period.

James Pilant

Breaking Down the Economic Death Spiral – and Saving the World Economy (via Realizing A Better World)

On By southwerkIn Capitalism, Economic measurement, Government Failure

Ho-Hyung (“Luke”) Lee writes on economic problems. He begins thusly –

The Western countries, that is, the United States and Great Britain, and including Japan, are among the most innovative countries in the world. They have the best universities; they have the best political systems; they have the best technologies. Unfortunately, they have failed to revive their own economies over the last several years. Japan, for one, has had a stagnant economy for almost two decades now. What’s wrong with them and their economies? Isn’t there anyone who can figure out what the real causes of the current economic crisis are and suggest a clear solution?

He then lays out his conception of a solution. It’s well worth your reading.

James Pilant

Moody’s To Cut U.S. Rating?

On By southwerkIn business ethics, ethics, Government Failure, President Obama

From MSNBC –

Moody’s warned Monday that it could move a step closer to cutting the U.S. AAA rating if President Obama’s tax and unemployment benefit package becomes law.

The plan agreed to by President Obama and Republican leaders last week could push up debt levels, increasing the likelihood of a negative outlook on the United States rating in the coming two years, the ratings agency said.

A negative outlook, if adopted, would make a rating cut more likely over the following 12-to-18 months.

For the United States, a loss of the top Aaa rating, reduce the appeal of U.S. Treasuries, which currently rank as among the world’s safest investments.

We just spent several months with every commentator screaming out that we can’t afford to spend more money, that social security had to be cut, that things could not go on the way they had been and then –

President Obama made a deal with the Republicans to add trillions to the debt! (and social security will still get cut!)

The bizzarro world of Washington marches on. But there will be pain, there will be payback.

James Pilant

Why The Tax Cut Deal Isn’t Cutting It. (via Rortybomb)

On By southwerkIn business ethics, Capitalism, Government Failure, President Obama

Rortybomb is great. I wanted to take a paragraph out and quote him but I couldn’t pass up the graph, so, I reblogged.
Give him a read. It’s richly merited.

James Pilant

Why The Tax Cut Deal Isn't Cutting It. I want to be sold on this tax cut deal on the economics, but the more I look at it the less I'm impressed with it. According to Ezra Klein, the White House is circulating this diagram around the Hill.  James Kwak dissects this chart and the narrative that "Obama won" on this deal; I'll do the same.  Let's take the "What We Got" apart. Child Tax Credit From the Republican Pledge To America (pdf): …these looming tax hikes will hurt every family i … Read More

via Rortybomb

Obama Staffer Finds New Job – Citibank!

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, President Obama

From Huffington Post –

Citigroup Inc named U.S. President Barack Obama’s former budget director as a senior global banking adviser on Thursday, strengthening its ties to high-profile former officials the same week the bailed-out bank finished shrugging off U.S. government ownership.

Peter Orszag, currently a senior fellow at the Council on Foreign Relations, is Citigroup’s second hire of a former senior government official this month. Last week the bank hired Carlos Gutierrez, former Commerce Secretary under President George W. Bush, as a vice chairman for its institutional clients group.

Orszag, who had worked as director of the Office of Management and Budget under President Obama, left the White House in July. He was one of the president’s most prominent advisers and remains well-connected in U.S. political circles.

As a presidential adviser, wouldn’t he have a played an important perhaps critical role in the bailout (TARP)? Would it be likely that he had a role in making sure there has been no prosecution of the crimes committed by the banking sector during the past two years? Wouldn’t etc., etc?

Is this pathetic or what? How long has this deal been in place? Did he always know there was a warm place for him at Citibank? Or was it just part of the expectations of the job? What’s he going to get, 5 mil, 7 mil, not counting stock options, the company car and the other goodies?

What is this? What is this place where the people who are supposed to be protecting us are the employees of banks, apparently on some kind of rest cure in the oval office until returned to duty?

Wasn’t this supposed to be a different kind of Presidency, you know not run by lobbyist? Well, they keep the lobbyists at a comfortable distance – inside the White House.

James Pilant

Jon Stewart Explains Aftermath Of Budget Deal

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, President Obama

Jon Stewart
From the Huffington Post –

(Click the link to see the video.)

Have people been too hard on President Obama? On Thursday night’s “Daily Show,” Jon Stewart approached this topic based on the American people’s response to the President’s recent tax cut deal. At his most recent press conference, you didn’t even need to have the sound on to see how annoyed Obama was.

Stewart pointed out that Obama has always been frustrated with Republicans, but now it seems like he’s become disillusioned with his own supporters. At the press conference, he defended his compromise with Republicans that even the richest Americans would keep their tax cuts and unemployment benefits would be extended. When Obama said it was like the public option battle all over again — no one caring if a much-needed bill was passed because of one compromise that was made — you could really see how frustrated he was.

As always with Jon Stewart it is difficult to add anything to what he has to say, so I’ll let the video say it.

By the way, I am troubled by the not clear connection between this and business ethics. But the tax structure and unemployment are vital elements of the business world and whether or not these actions are just and moral. Should the wealthiest of Americans get a tax cut when so many are unemployed? That’s a business ethics question. At what point is there a shared bond between Americans requiring even a minimal sacrifice? That’s an ethics question.

James Pilant

Jon Stewart Explains The Bush Tax Cut Extension!

On By southwerkIn ethics, Government Failure

Nation's Greatest Source of News?
From Huffington Post –

(Click on the link to get to the video.)

After much bickering back and forth over the Bush era tax cuts set to expire at the end of this year, President Obama announced this week that a deal had been made between the Democrats and Republicans in Congress. On Tuesday night’s “Daily Show,” Jon Stewart, ” like the House Democrats, had a lot to say about Obama’s compromise and what it means for the future.