Since those of us with roots in Oklahoma and Texas must deal with the insanity of elected representatives who would have fit more aptly in the 15th Century rather than the 21st, we must deal with the notorious blathering of the notion of “climate change being a hoax” (by Senator James Inhofe) or the necessity of the Governor of Texas to sue the Environmental Protection Agency for regulating carbon emissions. Last November, the emails of several top climate scientists were hacked and published. Climate deniers seized upon a handful of quotes as evidence that man-made global warming is actually in doubt in the scientific community. However, several independent investigations have concluded that the emails in no way casts doubt on the overwhelming, decades-long scientific research and the reality of climate change.
In case your friends who have an allergy to intellect and scientific research, I provide the accumulation below for you to offer our friends in denial. And, one additional thing…let’s just say the deniers are correct…wouldn’t it still make sense to develop cleaner sources of energy because we have to breath the air we pollute. Maybe you should suggest to your friends who doubt the damage done by greenhouse emissions that you would be better convinced if they would just hook up a plastic tube to one of their carbon emitting cars and breathe that air directly into their lungs for a week or two. I’m just guessing none of them will be bending over to wrap their lips around the exhaust pipe of their car to prove the point to you. This said…wouldn’t that be great if all the talent of FOX (so called) News and Rush Limbaugh would prove this point to us. Just think…Fox and the Excellence in Broadcast Network (Rush’s broadcast flagship) could just pump car exhaust right into the studios for the next year. Shoot, if they’d do that I be really convinced they believed what they said.
Now…here’s the claims and the responses to those claims.
#1 CLAIM: Scientists have manipulated data.
Skeptics have been pointing to an email from scientist Phil Jones where he said he used a "trick" with his data. As climate expert Bob Ward writes, "Scientists say 'trick' not just to mean deception. They mean it as a clever way of doing something -- a short cut can be a trick." RealClimate also explained that "the 'trick' is just to plot the instrumental records along with reconstruction so that the context of the recent warming is clear. Scientists often use the term 'trick' to refer to ... 'a good way to deal with a problem', rather than something that is 'secret', and so there is nothing problematic in this at all."
#2 CLAIM: Scientists had private doubts about whether the world really is heating up.
TRUTH: Combing through over a decade of personal correspondence, which is then taken out of context can seem to prove just about anything. Skeptics have been pointing to one email from Kevin Trenberth, in which he said, "The fact is that we can't account for the lack of warming at the moment and it is a travesty that we can't." However, this is clear example of cherry picking quotes. Trenberth was referring to hat there was an "incomplete explanation" of the short-term variability of temperatures, but concludes that "global warming is unequivocally happening."
#3 CLAIM: These scientists worked to suppress evidence and deleted emails.
TRUTH: Thousands of emails from over 13 years were stolen, and edited, and have been taken out of context for those with a political agenda. As blogger Jeff Masters writes,
"Even if every bit of mud slung at these scientists were true, the body of scientific work supporting the theory of human-caused climate change—which spans hundreds of thousands of scientific papers written by tens of thousands of scientists in dozens of different scientific disciplines—is too vast to be budged by the flaws in the works of the three or four scientists being subject to the fiercest attacks."
As climate czar Carol Browner says, "I'm sticking with the 2,500 scientists [of the Intergovernmental Panel on Climate Change.] These people have been studying this issue for a very long time and agree this problem is real."
#4 CLAIM: Scientists have been working to remove skeptical peers from the climate discussion.
TRUTH: Organization politics, disagreement and strife are hardly foreign ideas in university, research and scientific communities. As the blog run by climate scientists Real Climate writes, "Since emails are normally intended to be private, people writing them are, shall we say, somewhat freer in expressing themselves than they would in a public statement." Again, this does not remotely prove any sort of cover-up, and the critiques of these papers were made and debated by scientists PUBLICLY, but perhaps less bluntly than they were stated in the emails. (Here's what the "infamous" line about keeping people out and peer review was ACCTUALLY about.)
#5 CLAIM: These emails are the final nail in the coffin for the idea that humans cause global warming.
TRUTH: If the denier's wildest claims were true that are bantered around throughout the Internet, wouldn't nearly 15 years of emails ACTUALLY SHOW some of these insipid rumors to be true?
More from Real Climate: "More interesting is what is not contained in the emails. There is no evidence of any worldwide conspiracy, no mention of George Soros nefariously funding climate research, no grand plan to ‘get rid of the MWP’, no admission that global warming is a hoax, no evidence of the falsifying of data, and no ‘marching orders’ from our socialist/communist/vegetarian overlords. The truly paranoid will put this down to the hackers also being in on the plot though."
#6 CLAIM: This reignites the debate about if global warming is real.
TRUTH: There is strong consensus in scientific community that global warming is real and is caused by humans. The top scientists in the world have just released a new report on the realities of global warming. Kevin Grandia summarizes some of the key points about emissions, melting ice sheets, and rising sea levels. The emails don't change any of this reality.
Thursday, February 18, 2010
Sunday, February 7, 2010
A MUST READ FROM THE NEW YORK TIMES
I wouldn’t normally reprint an entire editorial, or article of any kind on this blog. But, Sunday’s New York Times Editorial I think is a must read for anyone who really wants to understand the recession along with the political difficulty of addressing our economic destination going forward. I agree with everything in the article, save the suggestion at the end of the editorial.
This suggestion seems harsh to me to the most fragile among us…the very oldest beneficiaries of social security. I don’t think our society should tolerate a penalty for living long. However, other than that suggestion by the times I think this is a lengthy article…but, a short primer for economics.
February 7, 2010
Editorial
The Truth About the Deficit
When the White House released its new budget last week, including more spending to create desperately needed jobs, Republican leaders in Congress denounced President Obama for driving up the deficit and demanded that the Democrats halt their “reckless” ways.
The deficit numbers — a projected $1.3 trillion in fiscal 2011 alone — are breathtaking. What is even more breathtaking is the Republicans’ cynical refusal to acknowledge that the country would never have gotten into so deep a hole if President George W. Bush and the Republican-led Congress had not spent years slashing taxes — mainly on the wealthy — and spending with far too little restraint. Unfortunately, the problem does not stop there.
The Republican amnesia and posturing are playing well on the hustings, where Americans are deeply anxious about the economy and fearful of losing their jobs and homes. Far too many Democratic lawmakers are losing their nerve.
Americans should be anxious, for reasons including the huge deficit. But the cold economic truth is this: At a time of high unemployment and fragile growth, the last thing the government should do is to slash spending. That will only drive the economy into deeper trouble.
None of this means that the politicians — from either party — are off the hook. They will soon need to make hard decisions about how to reduce the deficit. But more posturing and sniping is not going to make the economy better or solve the deficit problem. President Obama has called on the Republicans to join a bipartisan commission to help make those tough decisions, but they have been resistant to the proposal.
•
We fear the demagoguing is not going to stop, especially with Congressional elections this November. As the budget debate plays out, here are some basic facts about the deficit that Americans need to consider:
HOW DID WE GET HERE? When President Bush took office in 2001, the federal budget had been in the black for three years, and continued surpluses were projected for a decade to come.
By the time Mr. Bush left office in early 2009, the government had run big deficits for seven straight years, and the economy was on the brink of another Great Depression. On Jan. 7, 2009 — two weeks before Mr. Obama was inaugurated — the Congressional Budget Office issued new budget estimates showing a fiscal year 2009 deficit of well over $1 trillion.
About half of today’s huge deficits can be chalked up to Bush-era profligacy: mainly cutting taxes deeply while borrowing to wage two wars and to enact the Medicare prescription drug benefit — all of which Republicans supported, virtually in lockstep.
The other half of recent deficits is due to the recession and the financial crisis.
To avoid a meltdown, the government — under President Bush and President Obama — rightly decided it had no choice but to spend hundreds of billions of dollars to bail out banks and car companies and to stimulate the economy. That prevented a very bad situation from becoming much worse, but as the recession dragged on, hundreds of billions in tax revenues have also dried up.
As for why the financial system and the economy imploded, President Bush and Congress deserve much of the blame for their devotion to debt-driven growth and blind deregulatory zeal — although on deregulation, President Clinton and his team (some of whom are back in the White House) were also complicit.
Were it not for those multiple calamities, budget deficits today would be negligible. That does not mean we would be off the hook. An aging population and relentlessly rising health care costs will hit the country with even deeper deficits as the baby boomers retire. Politicians need to pass health care reform now and start thinking seriously about Social Security and tax reform.
So what are the immediate fiscal lessons here? The first lesson is that spending without taxing is a recipe for huge deficits, and that running big deficits when the economy is expanding only sets the country up for bigger deficits when the economy contracts. The second lesson is that once a deep recession takes hold, slashing government spending is not going to solve the problem. It will only make it worse.
WHAT CAN BE DONE NOW? Here is an unpopular but undeniable fact of life: When private sector demand is weak, the federal government must serve as the spender of last resort. Otherwise, collapsing demand sets in motion a negative, self-reinforcing spiral in which lack of demand — for goods, services and new employees — leads to ever deepening economic weakness.
That is why when the banks and the economy began to crumble in 2008, President Bush responded with a $700 billion bank bailout and a $168 billion stimulus package. When Mr. Obama took office, the banks were still shaky and the economy was still plunging— as measured by real-life indicators like jobs, consumer spending, credit availability, home equity, retirement savings and business confidence. The new administration made the sound decision to continue the bailout and pushed a $787 billion stimulus through Congress, with very little Republican help.
The stimulus package slowed job losses and helped spur activity — in the third quarter of 2009, the economy grew at an annual rate of 2.2 percent, and the initial fourth-quarter reading was 5.7 percent, a rebound few thought possible a year ago.
Still, without a jobs revival to boost consumer spending and tax revenues — and with the states facing immense budget shortfalls — the economy is unlikely to do anything other than limp along, at best, once the effects of the stimulus fade this year.
In his recent budget, Mr. Obama proposed to spend $266 billion on tax credits for hiring and new job-creation investments, and on other short-term stimulus including extended unemployment compensation. That would improve on the House-passed $154 billion jobs bill. But in the Senate, Republicans are balking at the prospect of a big bill, saying they need to hold down the deficit. They have spooked the Democrats, who are now trying to negotiate what appears to be a far too modest bill in hopes of winning Republican support.
What they should be saying — and what the White House should be saying a lot louder — is that a prolonged downturn or a renewed recession would do far more damage to the budget than upfront deficit spending. In fact, a clear lesson from the Depression of the 1930s is that reducing deficits at a time of economic fragility undercuts recovery.
SO DO WE JUST LIVE WITH THE DEFICIT? The problem must be addressed. Persistently high deficits are harmful to the economy and the country’s long-run security.
If the government must keep borrowing to make up the difference, it could drive up interest rates and force private companies to compete with the government for investors. That, in turn, would reduce economic growth and, by extension, the potential earnings — and standard of living — of everyone.
The process is generally gradual. But it could be wrenching if creditors lose confidence that the government will ever put its fiscal house in order and suddenly decide to put their money elsewhere. That could lead to a fiscal crisis, with sharp spikes in interest rates and a rapidly depreciating currency.
There is no question that, over the next several decades, deficits and debt in the United States are headed for dangerously high levels. But today’s deficit fearmongers invariably fail to note that the impact of stimulus spending on the long-term fiscal problem is small, because the spending is temporary.
The real problem, which also goes unmentioned, is that dangerous deficits will accumulate over time if continuing trends and policies — especially in health care — persist unchanged.
SO HOW DO WE FIX IT? Mr. Obama’s budget makes a down payment on deficit reduction by freezing some nonsecurity discretionary spending for three years, and by letting the Bush tax cuts for the richest Americans expire at the end of this year.
To truly tame deficits will require serious health care reform, the sooner the better. Other aspects of the long-term fiscal problem — raising taxes and retooling Social Security — must take place in earnest as the economy recovers.
Contrary to popular belief, there are many well-thought-out ideas for such reforms. Where technical questions are difficult, particularly on health care costs, reformers have advocated demonstration projects that can be tested over time. Where the real difficulty lies is summoning the political will to do what must be done, even though it will be unpopular.
If these problems are not addressed, here is what we face: Under current policies, federal debt in the United States — the sum total of annual deficits — would grow from 53 percent of the size of the economy in 2009 to more than 300 percent by 2050, driven mainly by rapidly rising health care costs and, in part, by the aging of the population. Combined, those two factors exert enormous pressure on the government’s biggest spending programs, Medicare and Medicaid, and, to a lesser extent, Social Security.
Unless health care costs are controlled, there is no way to solve the country’s long-term deficit and debt problems.
But that will not be enough. Broad tax reform is also essential to ensure that revenues keep pace with expenditures. From 1978 to 2008, revenues averaged about 18.4 percent of the economy. But without policy changes, expenditures for everything other than interest on the national debt will increase from 19.2 percent of the size of the economy in 2008 to 24.5 percent in 2050.
On the need for more taxes, Mr. Obama has been less than candid, pledging never to raise taxes on anyone making less than $250,000. Republican lawmakers have been worse, calling for tax cuts at most every opportunity — and never acknowledging that a shortfall in revenue is one of the important causes of the deficit.
The deficit commission that Mr. Obama intends to establish could be helpful in breaking this logjam, by calling for necessary changes that politicians would be loath to broach without political cover.
We hope that health care reform will move ahead before that. If it does, the commission will still have to press for new taxes that both raise revenue and broaden the tax base, including a value added tax.
And then there is Social Security. What is needed is a combination of benefit cuts and tax increases that preserve the program’s essential nature — a contract under which the young support the old via taxes and the rich help the poor via a benefits formula that favors low- income beneficiaries. One sound approach would be to link benefit levels to life expectancy, so that as people live longer, future benefits would be modestly reduced while payroll taxes that support Social Security would be modestly increased.
•
There is no way to get deficits under control until our political leaders are willing to acknowledge difficult truths and make even more difficult political choices. We have heard and seen too little of that from the Democrats lately, and none at all from the Republicans. That is truly a recipe for disaster.
This suggestion seems harsh to me to the most fragile among us…the very oldest beneficiaries of social security. I don’t think our society should tolerate a penalty for living long. However, other than that suggestion by the times I think this is a lengthy article…but, a short primer for economics.
February 7, 2010
Editorial
The Truth About the Deficit
When the White House released its new budget last week, including more spending to create desperately needed jobs, Republican leaders in Congress denounced President Obama for driving up the deficit and demanded that the Democrats halt their “reckless” ways.
The deficit numbers — a projected $1.3 trillion in fiscal 2011 alone — are breathtaking. What is even more breathtaking is the Republicans’ cynical refusal to acknowledge that the country would never have gotten into so deep a hole if President George W. Bush and the Republican-led Congress had not spent years slashing taxes — mainly on the wealthy — and spending with far too little restraint. Unfortunately, the problem does not stop there.
The Republican amnesia and posturing are playing well on the hustings, where Americans are deeply anxious about the economy and fearful of losing their jobs and homes. Far too many Democratic lawmakers are losing their nerve.
Americans should be anxious, for reasons including the huge deficit. But the cold economic truth is this: At a time of high unemployment and fragile growth, the last thing the government should do is to slash spending. That will only drive the economy into deeper trouble.
None of this means that the politicians — from either party — are off the hook. They will soon need to make hard decisions about how to reduce the deficit. But more posturing and sniping is not going to make the economy better or solve the deficit problem. President Obama has called on the Republicans to join a bipartisan commission to help make those tough decisions, but they have been resistant to the proposal.
•
We fear the demagoguing is not going to stop, especially with Congressional elections this November. As the budget debate plays out, here are some basic facts about the deficit that Americans need to consider:
HOW DID WE GET HERE? When President Bush took office in 2001, the federal budget had been in the black for three years, and continued surpluses were projected for a decade to come.
By the time Mr. Bush left office in early 2009, the government had run big deficits for seven straight years, and the economy was on the brink of another Great Depression. On Jan. 7, 2009 — two weeks before Mr. Obama was inaugurated — the Congressional Budget Office issued new budget estimates showing a fiscal year 2009 deficit of well over $1 trillion.
About half of today’s huge deficits can be chalked up to Bush-era profligacy: mainly cutting taxes deeply while borrowing to wage two wars and to enact the Medicare prescription drug benefit — all of which Republicans supported, virtually in lockstep.
The other half of recent deficits is due to the recession and the financial crisis.
To avoid a meltdown, the government — under President Bush and President Obama — rightly decided it had no choice but to spend hundreds of billions of dollars to bail out banks and car companies and to stimulate the economy. That prevented a very bad situation from becoming much worse, but as the recession dragged on, hundreds of billions in tax revenues have also dried up.
As for why the financial system and the economy imploded, President Bush and Congress deserve much of the blame for their devotion to debt-driven growth and blind deregulatory zeal — although on deregulation, President Clinton and his team (some of whom are back in the White House) were also complicit.
Were it not for those multiple calamities, budget deficits today would be negligible. That does not mean we would be off the hook. An aging population and relentlessly rising health care costs will hit the country with even deeper deficits as the baby boomers retire. Politicians need to pass health care reform now and start thinking seriously about Social Security and tax reform.
So what are the immediate fiscal lessons here? The first lesson is that spending without taxing is a recipe for huge deficits, and that running big deficits when the economy is expanding only sets the country up for bigger deficits when the economy contracts. The second lesson is that once a deep recession takes hold, slashing government spending is not going to solve the problem. It will only make it worse.
WHAT CAN BE DONE NOW? Here is an unpopular but undeniable fact of life: When private sector demand is weak, the federal government must serve as the spender of last resort. Otherwise, collapsing demand sets in motion a negative, self-reinforcing spiral in which lack of demand — for goods, services and new employees — leads to ever deepening economic weakness.
That is why when the banks and the economy began to crumble in 2008, President Bush responded with a $700 billion bank bailout and a $168 billion stimulus package. When Mr. Obama took office, the banks were still shaky and the economy was still plunging— as measured by real-life indicators like jobs, consumer spending, credit availability, home equity, retirement savings and business confidence. The new administration made the sound decision to continue the bailout and pushed a $787 billion stimulus through Congress, with very little Republican help.
The stimulus package slowed job losses and helped spur activity — in the third quarter of 2009, the economy grew at an annual rate of 2.2 percent, and the initial fourth-quarter reading was 5.7 percent, a rebound few thought possible a year ago.
Still, without a jobs revival to boost consumer spending and tax revenues — and with the states facing immense budget shortfalls — the economy is unlikely to do anything other than limp along, at best, once the effects of the stimulus fade this year.
In his recent budget, Mr. Obama proposed to spend $266 billion on tax credits for hiring and new job-creation investments, and on other short-term stimulus including extended unemployment compensation. That would improve on the House-passed $154 billion jobs bill. But in the Senate, Republicans are balking at the prospect of a big bill, saying they need to hold down the deficit. They have spooked the Democrats, who are now trying to negotiate what appears to be a far too modest bill in hopes of winning Republican support.
What they should be saying — and what the White House should be saying a lot louder — is that a prolonged downturn or a renewed recession would do far more damage to the budget than upfront deficit spending. In fact, a clear lesson from the Depression of the 1930s is that reducing deficits at a time of economic fragility undercuts recovery.
SO DO WE JUST LIVE WITH THE DEFICIT? The problem must be addressed. Persistently high deficits are harmful to the economy and the country’s long-run security.
If the government must keep borrowing to make up the difference, it could drive up interest rates and force private companies to compete with the government for investors. That, in turn, would reduce economic growth and, by extension, the potential earnings — and standard of living — of everyone.
The process is generally gradual. But it could be wrenching if creditors lose confidence that the government will ever put its fiscal house in order and suddenly decide to put their money elsewhere. That could lead to a fiscal crisis, with sharp spikes in interest rates and a rapidly depreciating currency.
There is no question that, over the next several decades, deficits and debt in the United States are headed for dangerously high levels. But today’s deficit fearmongers invariably fail to note that the impact of stimulus spending on the long-term fiscal problem is small, because the spending is temporary.
The real problem, which also goes unmentioned, is that dangerous deficits will accumulate over time if continuing trends and policies — especially in health care — persist unchanged.
SO HOW DO WE FIX IT? Mr. Obama’s budget makes a down payment on deficit reduction by freezing some nonsecurity discretionary spending for three years, and by letting the Bush tax cuts for the richest Americans expire at the end of this year.
To truly tame deficits will require serious health care reform, the sooner the better. Other aspects of the long-term fiscal problem — raising taxes and retooling Social Security — must take place in earnest as the economy recovers.
Contrary to popular belief, there are many well-thought-out ideas for such reforms. Where technical questions are difficult, particularly on health care costs, reformers have advocated demonstration projects that can be tested over time. Where the real difficulty lies is summoning the political will to do what must be done, even though it will be unpopular.
If these problems are not addressed, here is what we face: Under current policies, federal debt in the United States — the sum total of annual deficits — would grow from 53 percent of the size of the economy in 2009 to more than 300 percent by 2050, driven mainly by rapidly rising health care costs and, in part, by the aging of the population. Combined, those two factors exert enormous pressure on the government’s biggest spending programs, Medicare and Medicaid, and, to a lesser extent, Social Security.
Unless health care costs are controlled, there is no way to solve the country’s long-term deficit and debt problems.
But that will not be enough. Broad tax reform is also essential to ensure that revenues keep pace with expenditures. From 1978 to 2008, revenues averaged about 18.4 percent of the economy. But without policy changes, expenditures for everything other than interest on the national debt will increase from 19.2 percent of the size of the economy in 2008 to 24.5 percent in 2050.
On the need for more taxes, Mr. Obama has been less than candid, pledging never to raise taxes on anyone making less than $250,000. Republican lawmakers have been worse, calling for tax cuts at most every opportunity — and never acknowledging that a shortfall in revenue is one of the important causes of the deficit.
The deficit commission that Mr. Obama intends to establish could be helpful in breaking this logjam, by calling for necessary changes that politicians would be loath to broach without political cover.
We hope that health care reform will move ahead before that. If it does, the commission will still have to press for new taxes that both raise revenue and broaden the tax base, including a value added tax.
And then there is Social Security. What is needed is a combination of benefit cuts and tax increases that preserve the program’s essential nature — a contract under which the young support the old via taxes and the rich help the poor via a benefits formula that favors low- income beneficiaries. One sound approach would be to link benefit levels to life expectancy, so that as people live longer, future benefits would be modestly reduced while payroll taxes that support Social Security would be modestly increased.
•
There is no way to get deficits under control until our political leaders are willing to acknowledge difficult truths and make even more difficult political choices. We have heard and seen too little of that from the Democrats lately, and none at all from the Republicans. That is truly a recipe for disaster.
Monday, February 1, 2010
BANKING REFORM – FACT VS FRAMING FICTION
The House and Senate Republicans are about to wage war against financial regulatory reform. Here’s your chance to know exactly what they are up to and why regulatory reform, if not enacted, will result in another financial meltdown with the results growing substantially more critical with each crisis.
We should have learned our lesson in the financial crisis in the eighties…but, we went right ahead with the notion that if we continued to de-regulate the financial institutions we would all be the better for it. However, the financial institutions saw it a different way. They saw it as their chance to make huge profits for themselves believing you, as an ordinary American citizen, would be happy eating the crumbs off the table. Well…in the end they put us all at risk. And, remember this if you don’t remember anything else…you, the ordinary American citizen, had to bail their sorry asses out. Then, to show their gratitude, they closed their lending window and returned to their overpaid bonuses without a grain of remorse.
Large Wall Street commercial banks and investment banks find it far easier to make a few big loans than a lot of small loans. But, also remember this. If you owe the bank, say, one hundred thousand dollars, they own you…but, if you owe the bank 100 billion dollars you own them. So, you can see who gets the upper hand. However, the fact is, if you originate a lot of small loans that also circulates money to customers who in turn use it to start new business, buy cars, furniture and goods that will pick up the economy. The economy is not and never has been a trickle down process…it’s always been a ground swell process.
Today, Paul Krugman, wrote about the model we should follow if we want stability in the financial markets, and Frank Luntz (a Republican wordsmith) issued a memo to Republicans on how to game the frame game by confusing you with language.
Here’s Luntz argument as written by Sam Stein in the Huffington Post.
“Nine months after he penned a memo laying out the arguments for health care legislation's destruction, Republican message guru Frank Luntz has put together a playbook to help derail financial regulatory reform.
In a 17-page memo titled, "The Language of Financial Reform," Luntz urged opponents of reform to frame the final product as filled with bank bailouts, lobbyist loopholes, and additional layers of complicated government bureaucracy.
"If there is one thing we can all agree on, it's that the bad decisions and harmful policies by Washington bureaucrats that in many ways led to the economic crash must never be repeated," Luntz wrote. "This is your critical advantage. Washington's incompetence is the common ground on which you can build support."
Luntz continued: "Ordinarily, calling for a new government program 'to protect consumers' would be extraordinary popular. But these are not ordinary times. The American people are not just saying 'no.' They are saying 'hell no' to more government agencies, more bureaucrats, and more legislation crafted by special interests."
In Republican circles Luntz's words, which have helped the party score win the message wars over health care and other legislative battles, are often treated as gospel. Already, some of the advice he's offered on regulatory reform has found its way into the political discourse -- with a proposed Consumer Financial Protection Agency seemingly on life support under Republican objections.
In addition to tying regulatory reform to a massive government takeover, Luntz's memo includes several other data points and messaging suggestions as a blue print for the legislation's defeat. Opponents, he writes, would be well served to link the package to the financial industry bailout (which, it should be noted, is fundamentally not part of the legislation). According to accompanying polling data, 52 percent of voters said they would be "much less likely" to vote for their member of Congress if they voted for a financial reform bill that contained a fund to bail out banks and Wall Street.
"Public outrage about the bailout of banks and Wall Street is a simmering time bomb set to go off on Election Day," Luntz wrote. "Frankly, the single best way to kill any legislation is to link it to the Big Bank Bailout."
Another effective strategy to kill the bill, according to Luntz, is to make the case that it was written in secret by lobbyists.
"The American people are tired of add-ons, earmarks, and backroom deals - but they are mad as hell at 'lobbyist loopholes,'" Luntz wrote. "You must put proponents of the legislation on the defense, forcing them to attempt to justify the 'lobbyist loopholes' and exemptions placed in the bill... Highlight the exemptions. Broadcast them. Remind them, 'The legislation is filled with lobbyist loopholes that exclude certain wealthy, powerful industries from regulations.'"
On the specific issue of a Consumer Financial Protection Agency, Luntz argued that opponents should stress the high-cost of creating an additional regulatory body in addition to the damaging effects it will supposedly have on "small business owners" (as opposed to, merely, small businesses).
"Owning a small business is part of the American Dream and Congress should make it easier to be an entrepreneur," wrote Luntz. "But the Financial Reform bill and the creation of the CFPA makes it harder to be a small business owner because it will choke off credit options to small business owners."
These lines or arguments are similar to the ones used by regulatory reform opponents in the past, often with some success. What's telling is that they are being trotted out again in this type of economic environment.
Luntz does seem to acknowledge that the climate makes defeating regulatory reform a bit trickier. At the top of his memo he urges opponents (primarily Republican lawmakers) to "acknowledge the need for reform that ensures this NEVER happens again," He insists that "the status quo is not an option" and that members of Congress, when addressing the crisis, "never forget its impact on your audience." Luntz even advise his audience to promote themselves the agents of change.
But for the sake of winning the debate, he adds, it is vital to insist that such change does not include additional Washington-based regulatory powers.
"Many of the same members of Congress responsible for the legislation that helped create the housing bubble and the Wall Street financial crisis are now attempting to create another new government agency with an unlimited budget and almost unlimited regulatory powers," wrote the GOP wordsith. "I'm sorry to say this but they don't know what they're doing. They have gotten it wrong time and time again..."
"A new agency with new bureaucrats is not change we can believe in," Luntz wrote. "It's not change at all."”
So Luntz argument is founded on the use of words…not the facts or the danger of neglecting to fix what is wrong about the financial regulatory system.
However, Paul Krugman, in his Op-Ed article in the New York Times February 1 issue, notes the success of dealing with the financial crisis in Canada, an economy much like our own, and the success which can be factually measured there.
Mr Krugman writes, “Over the past decade the United States and Canada faced the same global environment. Both were confronted with the same flood of cheap goods and cheap money from Asia. Economists in both countries cheerfully declared that the era of severe recessions was over.
But when things fell apart, the consequences were very different here and there. In the United States, mortgage defaults soared, some major financial institutions collapsed, and others survived only thanks to huge government bailouts. In Canada, none of that happened. What did the Canadians do differently?
It wasn’t interest rate policy. Many commentators have blamed the Federal Reserve for the financial crisis, claiming that the Fed created a disastrous bubble by keeping interest rates too low for too long. But Canadian interest rates have tracked U.S. rates quite closely, so it seems that low rates aren’t enough by themselves to produce a financial crisis.”
Canada’s experience does seem to support the views of people like Elizabeth Warren, the head of the Congressional panel overseeing the bank bailout, who place much of the blame for the crisis on failure to protect consumers from deceptive lending. Canada has an independent Financial Consumer Agency, and it has sharply restricted subprime-type lending.
Above all, Canada’s experience seems to support those who say that the way to keep banking safe is to keep it boring — that is, to limit the extent to which banks can take on risk. The United States used to have a boring banking system, but Reagan-era deregulation made things dangerously interesting. Canada, by contrast, has maintained a happy tedium.
More specifically, Canada has been much stricter about limiting banks’ leverage, the extent to which they can rely on borrowed funds. It has also limited the process of securitization, in which banks package and resell claims on their loans outstanding — a process that was supposed to help banks reduce their risk by spreading it, but has turned out in practice to be a way for banks to make ever-bigger wagers with other people’s money.
There’s no question that in recent years these restrictions meant fewer opportunities for bankers to come up with clever ideas than would have been available if Canada had emulated America’s deregulatory zeal. But that, it turns out, was all to the good.
So what are the chances that the United States will learn from Canada’s success?
Actually, the financial reform bill that the House of Representatives passed in December would significantly Canadianize the U.S. system. It would create an independent Consumer Financial Protection Agency, it would establish limits on leverage, and it would limit securitization by requiring that lenders hold on to some of their loans.
…there’s a good chance that we’ll do nothing, or nothing much, to prevent future banking crises. But it won’t be because we don’t know what to do: we’ve got a clear example of how to keep banking safe sitting right next door.”
Don’t be fooled by conservative strategist whose true loyalty lies to Wall Street’s biggest commercial banks and investment banks. The truth is these folks are lazy. You see…it takes a great deal more effort to make a lot of small loans than it does to make one great big one. But, the small loans to small businesses are the life blood of a democratic capitalistic system. Create more customers and the result is a robust economy for small and large businesses alike. Catering to only wealthy will eventually strangle the life out of rich and poor alike.
We should have learned our lesson in the financial crisis in the eighties…but, we went right ahead with the notion that if we continued to de-regulate the financial institutions we would all be the better for it. However, the financial institutions saw it a different way. They saw it as their chance to make huge profits for themselves believing you, as an ordinary American citizen, would be happy eating the crumbs off the table. Well…in the end they put us all at risk. And, remember this if you don’t remember anything else…you, the ordinary American citizen, had to bail their sorry asses out. Then, to show their gratitude, they closed their lending window and returned to their overpaid bonuses without a grain of remorse.
Large Wall Street commercial banks and investment banks find it far easier to make a few big loans than a lot of small loans. But, also remember this. If you owe the bank, say, one hundred thousand dollars, they own you…but, if you owe the bank 100 billion dollars you own them. So, you can see who gets the upper hand. However, the fact is, if you originate a lot of small loans that also circulates money to customers who in turn use it to start new business, buy cars, furniture and goods that will pick up the economy. The economy is not and never has been a trickle down process…it’s always been a ground swell process.
Today, Paul Krugman, wrote about the model we should follow if we want stability in the financial markets, and Frank Luntz (a Republican wordsmith) issued a memo to Republicans on how to game the frame game by confusing you with language.
Here’s Luntz argument as written by Sam Stein in the Huffington Post.
“Nine months after he penned a memo laying out the arguments for health care legislation's destruction, Republican message guru Frank Luntz has put together a playbook to help derail financial regulatory reform.
In a 17-page memo titled, "The Language of Financial Reform," Luntz urged opponents of reform to frame the final product as filled with bank bailouts, lobbyist loopholes, and additional layers of complicated government bureaucracy.
"If there is one thing we can all agree on, it's that the bad decisions and harmful policies by Washington bureaucrats that in many ways led to the economic crash must never be repeated," Luntz wrote. "This is your critical advantage. Washington's incompetence is the common ground on which you can build support."
Luntz continued: "Ordinarily, calling for a new government program 'to protect consumers' would be extraordinary popular. But these are not ordinary times. The American people are not just saying 'no.' They are saying 'hell no' to more government agencies, more bureaucrats, and more legislation crafted by special interests."
In Republican circles Luntz's words, which have helped the party score win the message wars over health care and other legislative battles, are often treated as gospel. Already, some of the advice he's offered on regulatory reform has found its way into the political discourse -- with a proposed Consumer Financial Protection Agency seemingly on life support under Republican objections.
In addition to tying regulatory reform to a massive government takeover, Luntz's memo includes several other data points and messaging suggestions as a blue print for the legislation's defeat. Opponents, he writes, would be well served to link the package to the financial industry bailout (which, it should be noted, is fundamentally not part of the legislation). According to accompanying polling data, 52 percent of voters said they would be "much less likely" to vote for their member of Congress if they voted for a financial reform bill that contained a fund to bail out banks and Wall Street.
"Public outrage about the bailout of banks and Wall Street is a simmering time bomb set to go off on Election Day," Luntz wrote. "Frankly, the single best way to kill any legislation is to link it to the Big Bank Bailout."
Another effective strategy to kill the bill, according to Luntz, is to make the case that it was written in secret by lobbyists.
"The American people are tired of add-ons, earmarks, and backroom deals - but they are mad as hell at 'lobbyist loopholes,'" Luntz wrote. "You must put proponents of the legislation on the defense, forcing them to attempt to justify the 'lobbyist loopholes' and exemptions placed in the bill... Highlight the exemptions. Broadcast them. Remind them, 'The legislation is filled with lobbyist loopholes that exclude certain wealthy, powerful industries from regulations.'"
On the specific issue of a Consumer Financial Protection Agency, Luntz argued that opponents should stress the high-cost of creating an additional regulatory body in addition to the damaging effects it will supposedly have on "small business owners" (as opposed to, merely, small businesses).
"Owning a small business is part of the American Dream and Congress should make it easier to be an entrepreneur," wrote Luntz. "But the Financial Reform bill and the creation of the CFPA makes it harder to be a small business owner because it will choke off credit options to small business owners."
These lines or arguments are similar to the ones used by regulatory reform opponents in the past, often with some success. What's telling is that they are being trotted out again in this type of economic environment.
Luntz does seem to acknowledge that the climate makes defeating regulatory reform a bit trickier. At the top of his memo he urges opponents (primarily Republican lawmakers) to "acknowledge the need for reform that ensures this NEVER happens again," He insists that "the status quo is not an option" and that members of Congress, when addressing the crisis, "never forget its impact on your audience." Luntz even advise his audience to promote themselves the agents of change.
But for the sake of winning the debate, he adds, it is vital to insist that such change does not include additional Washington-based regulatory powers.
"Many of the same members of Congress responsible for the legislation that helped create the housing bubble and the Wall Street financial crisis are now attempting to create another new government agency with an unlimited budget and almost unlimited regulatory powers," wrote the GOP wordsith. "I'm sorry to say this but they don't know what they're doing. They have gotten it wrong time and time again..."
"A new agency with new bureaucrats is not change we can believe in," Luntz wrote. "It's not change at all."”
So Luntz argument is founded on the use of words…not the facts or the danger of neglecting to fix what is wrong about the financial regulatory system.
However, Paul Krugman, in his Op-Ed article in the New York Times February 1 issue, notes the success of dealing with the financial crisis in Canada, an economy much like our own, and the success which can be factually measured there.
Mr Krugman writes, “Over the past decade the United States and Canada faced the same global environment. Both were confronted with the same flood of cheap goods and cheap money from Asia. Economists in both countries cheerfully declared that the era of severe recessions was over.
But when things fell apart, the consequences were very different here and there. In the United States, mortgage defaults soared, some major financial institutions collapsed, and others survived only thanks to huge government bailouts. In Canada, none of that happened. What did the Canadians do differently?
It wasn’t interest rate policy. Many commentators have blamed the Federal Reserve for the financial crisis, claiming that the Fed created a disastrous bubble by keeping interest rates too low for too long. But Canadian interest rates have tracked U.S. rates quite closely, so it seems that low rates aren’t enough by themselves to produce a financial crisis.”
Canada’s experience does seem to support the views of people like Elizabeth Warren, the head of the Congressional panel overseeing the bank bailout, who place much of the blame for the crisis on failure to protect consumers from deceptive lending. Canada has an independent Financial Consumer Agency, and it has sharply restricted subprime-type lending.
Above all, Canada’s experience seems to support those who say that the way to keep banking safe is to keep it boring — that is, to limit the extent to which banks can take on risk. The United States used to have a boring banking system, but Reagan-era deregulation made things dangerously interesting. Canada, by contrast, has maintained a happy tedium.
More specifically, Canada has been much stricter about limiting banks’ leverage, the extent to which they can rely on borrowed funds. It has also limited the process of securitization, in which banks package and resell claims on their loans outstanding — a process that was supposed to help banks reduce their risk by spreading it, but has turned out in practice to be a way for banks to make ever-bigger wagers with other people’s money.
There’s no question that in recent years these restrictions meant fewer opportunities for bankers to come up with clever ideas than would have been available if Canada had emulated America’s deregulatory zeal. But that, it turns out, was all to the good.
So what are the chances that the United States will learn from Canada’s success?
Actually, the financial reform bill that the House of Representatives passed in December would significantly Canadianize the U.S. system. It would create an independent Consumer Financial Protection Agency, it would establish limits on leverage, and it would limit securitization by requiring that lenders hold on to some of their loans.
…there’s a good chance that we’ll do nothing, or nothing much, to prevent future banking crises. But it won’t be because we don’t know what to do: we’ve got a clear example of how to keep banking safe sitting right next door.”
Don’t be fooled by conservative strategist whose true loyalty lies to Wall Street’s biggest commercial banks and investment banks. The truth is these folks are lazy. You see…it takes a great deal more effort to make a lot of small loans than it does to make one great big one. But, the small loans to small businesses are the life blood of a democratic capitalistic system. Create more customers and the result is a robust economy for small and large businesses alike. Catering to only wealthy will eventually strangle the life out of rich and poor alike.
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