In Wake of JP Morgan Chase Debacle, Where is the Tea Party Again?

The fine folks at JP Morgan Chase continued to make unchecked bets (the same kind that A.I.G. made and got burned) and lost big: $2 Billion in the last 6 weeks.  A few of those folks have since lost their jobs.  But not the man who lobbied the hardest against regulations that would prevent Chase from making those bets – no, he still has his job.  The shareholders are doing what they’re supposed to be doing: asking tough questions.  Will Dimon keep his job?  Sure – crony capitalism rewards failures at the top.

What I want to know is where are the massive rallies by the Tea Party calling for Dimon to be fired and regulations to be imposed on gamblers masquerading as bankers?

The answer is easy: there aren’t any and there won’t be any.  The Tea Party was co-opted by the same folks who perpetrated the worst activities that led up to the Great Recession and our continued economic malaise.  No substantive changes were made in the way Chase or other banks do business – save the tens of Trillions of dollars they got for free from the Federal Reserve.

The co-opting included distracting the populists in the Tea Party with the supposedly scarier threat of a Black Man in the White House.

Meanwhile, speculators were allowed to run up the cost of oil and gasoline, which acts as a choke collar on the American economy, and other right-wing economic theories were imposed across Europe, which has led to what is likely to be another recession:

[h/t Bonddad]

The combination of high oil/gas prices, US corporations sitting on Trillions of dollars in cash (not hiring), and European economic weakness will not help the US economy.  Will our “recovery” be over soon; will we follow Europe into weaker and weaker economic conditions?  Don’t ask the Tea Party, they don’t truly care.

Will The Economy Grow Or Slow?

Generally, good economic discussion occurs at this blog.  There is a little too much commentary regarding what other folks are saying at other blogs (put another way, too much navel gazing and chest thumping).  The comparison between the first blog’s authors and others is especially silly when the following two statements were made in the same blog post:

In other words, the blogospheric Doomgasm has been prompted by fears that the economy will grow 1% more this quarter than last quarter!

For the record, I still see a slowdown or stall this quarter and/or next.

Look, either you think the economy will grow or slow this quarter.  It can’t do both at the same time.  Make a prediction based on what data you think you have that can support that prediction.

I don’t, for instance, write that I think the next 10 years will be hotter than the last 10 in one sentence, then write that I think cooling will occur.  It always amazes me how people slam climate science predictions (which have been correct more often than not, by the way) but let economists and economic commentators get away with double-speak.  Economists are not infallible gods.

By the way, I think I’ll listen to what Paul Krugman has to say about the potential future state of the U.S. economy.  He has earned a Nobel Prize, after all.

2-3 Year Supply of Foreclosed Homes Means Economic Recovery Will Remain Weak

28% of all home sales in the first quarter of 2011 were foreclosures.  In a healthy economy, that number doesn’t rise above 5%.

158,434 homes in some stage of foreclosure sold in the first quarter.  With around1.9 million homes remaining in foreclosure, the supply of just these types of homes will last between 2 and 3 years.  If no other major economic disruptions occur in the meantime, it will only be after that time that any economic recovery from 2007 can truly occur.

I’m not an economist, but I don’t see that as likely, quite frankly.  Seven years after the last recession started will be a prime time for another to start.  And the Federal Reserve and Treasury Department has done more to prop up billionaires than lower and middle class Americans, despite the fact that the latter sets are what actually drive the U.S. economy toward growth.  Moreover, those two institutions have run out of actions they can take.  Interest rates continue to hover near zero for banks (not that you and I see any tangible benefits) while trillions of dollars (literally) have been loaned to banks at those near-zero interest rates.  And that’s only a couple of examples of how close to the end of the string they are.

What left?  Well, the government abdicated its responsibility to ensure that a large enough economic stimulus was provided in 2009.  Politicians of both major parties refused to listen to economists who were experts on how we exited the Great Depression.  As a result, we’re left with a tepid economy and even worse disparate wealth differences between the top and bottom than prior to 2007.  I don’t see the situation improving appreciably any time soon.

Another Possible Reason For Enthusiasm Gap?

A lot has been made of the “enthusiasm gap” that might or might not exist between Republican Teabaggers eager to take our country back to the 1750′s and the Democrats who would prefer to keep moving forward into the 2000′s.  To some extent, I think the enthusiasm gap does exist.  I have provided brief examples in the past few weeks that could help in deciding whether the gap exists and whether it should exist.

Here is the latest:

Mortgage companies enrolled in the Obama administration’s signature foreclosure-prevention initiative may be receiving taxpayer funds despite not having a legal right to the home or to the mortgage, a top Treasury Department official revealed Wednesday.

But despite faulty or missing paperwork, the Obama administration allows mortgage companies to boot homeowners from the program, sticking the borrowers with massive bills that often leave them worse off.

Call me a wild-eyed liberal, but when a Democratic President who campaigned on fixing the economic disaster we were hurtling towards does more to help out those who set us on the course for disaster instead of the rest of us who, for the most part, were simply trying to lead our lives, well, I think you might be able to guess what the result is.  How enthusiastic should those homeowners be toward the President or his administration?  Obama has been riding the campaign trail for fellow Democrats pretty hard since Labor Day, telling crowds that his administration stopped the U.S. from going into another Great Depression; telling crowds that his administration fights for the little person; telling crowds that the bankers should be held accountable for their actions.

Stump speeches are all well and good, President Obama.  But when the banks who first offered loans to people who they didn’t check to ensure could afford them then bundled them up (without the requisite paperwork) and sold them to make a profit, then bought insurance policies on the loans, bundled those up and sold them to make more of a profit, then bet short on the packages because they knew they were worthless to make even more of a profit, then got taxpayer money to bail them out from the mess they created now get more taxpayer money to illegally kick people out of their homes, how much support can you really expect from those homeowners and taxpayers?

Especially when your administration hasn’t forced the banks to actually unravel those packages and see how worthless they really are?  Those bad mortgage default swaps should be fully accounted for on the banks’ ledgers.  Yet your administration has allowed the banks to play accounting games so the losses don’t show up.  Are we really to believe that the only entities who didn’t suffer as a result of the mortgage crisis were the banks?  They didn’t turn unprofitable in the past 3 years; they’ve continued to set record profits.  How glad are American voters supposed to be about that?  By the way, those bad packages will have to come due sometime.  And if your administration continues to kick that can down the road, like you have to so many other cans in the past two years, the result when they do come due will be many times more painful and devastating to the American economy than if they had been handled in the past 2 years.

But by all means, keep campaigning and telling Americans that everything will be alright with you and your buddies in charge.  You didn’t create this mess, but by not taking responsibility for it during your term (much like Afghanistan), the mess will become defined as yours in the annals of history.  Perhaps taking care of the multiple crises you face can take a higher priority in the next two years than you chasing down non-existent Republican Teabaggers who will compromise with you.  They’ve told you there will be absolutely no compromise.  Believe them at their word and start moving this country forward again, Mr. President.

Geithner, Wall St. & Jobs

From a WSJ article:

Two bills were introduced in December that would create a transaction tax. The bills would impose a tax of 0.25 percentage point on trades of more than $100,000, or $250 on a $100,000 transaction. The AFL-CIO is seeking a tax that would be a small fraction of that amount. The AFL-CIO proposal would be aimed at taxing investors and institutions that make numerous securities trades and would aim to shield average investors by exempting the first $100,000 in transactions and certain funds.

The tax would, under an AFL-CIO proposal, go toward creating jobs in infrastructure, such as road building.  Much more of the revenue would go toward paying down our record deficits.  How does the supposedly-Democratic White House respond?  Treasury Secretary Timothy Geithner rejects the proposal.  The pro-corporate Chamber of Commerce says levying more taxes isn’t conducive to job creation.

I Love This Feature

An by feature, I mean regularly occurring diary series.  I remember the original piece the diarist refers to because I copied part of it here.  The following is a copy of the follow-up, written today:

Dear Conservative Free-Market Capitalism Muckety Mucks,

Ninety-one days ago I gave you thirty days to fix the U.S. economy that you broke:

I’m just a simple, average citizen who has listened to you jawbone for decades—amplified non-stop by Fox News, CNBC, the Wall Street Journal and right-wing radio—about how perfect your system of “unfettered everything” is. How greed is good and regulation is the devil’s work. And yet, you seem to be strangely ineffective at fixing it when it breaks. Could it be you’ve been bullshitting us all along? …

Fix the damn economy on Main Street already, you Ayn Rand-worshipping free-market capitalist wizards. Show us how it’s done. Be the heroes we’ve been holding out for.

Bummer. You couldn’t do it, even with a two-month extension. Not even close. Instead of rolling up your sleeves and getting to work, all you’ve done is continue pointing your fingers at the Big Bad Government—the one that statistics confirm single-handedly saved your asses from Great Depression II—and whine. Hell, even your Savior of All Things Economic, Grover “Ayn Rand With a Beard” Norquist, couldn’t convince voters in Washington and Maine that your ideas were worth a bucket of warm spit.

Oh, sure, Wall Street is thriving, in large measure because they’re up to their old backroom book-cooking tricks again. (I did challenge you to work your magic “honestly, ethically and legally,” remember?) But Main Street is still tanking. So I guess it’s true—you’ve been bullshitting us all along.

That doesn’t sit well with me. Because, see, I’ve been programmed by Frank Luntz and the GOP spin machine to think of two things when I hear the word conservative: fiscal competence and defense. You fucked up the defense part real good. And now you’ve failed to prove your worth on the economy. I mean, good gracious Gerty, I gave you 90 days and look at what you did: in what should’ve been your moment of triumph, you dithered.

Thanks For The Awesome Job Market, Cons

Any Con worth their salt will tell you that the “free-market” will fix everything!  Their zeal to cram their fake religion down everybody’s throats led to the collapse of the U.S. economy in this first decade of the 21st century.  But there is a huge disconnect.  Thanks to both Cons and Democrats looking out for their Wall St. benefactors, most Americans haven’t and won’t feel anything close to a recovery for a long, long time.  While Wall St. has posted stunning gains since their lows earlier this year, millions more Americans have continued to lose their jobs and their livlihoods.

How bad have things gotten for the real average American?  How about a look at a paper published last month by Advance Realty and Rutgers: America’s New Post-Recession Employment Arithmetic.  Here are some choice figures for you to chew on [emphasis mine]:

• The combination of a weak economic expansion sandwiched between two recessions (2001, and 2007–2009) produced what will be a lost employment decade. As of August 2009, the nation had 1.3 million (1,256,000) fewer private sector jobs than in December 1999. This is the first time since the Great Depression of the 1930s that America will have an absolute loss of jobs over the course of a decade.

• To put this new millennium experience into perspective, during the final two decades of the twentieth century, the nation gained a total of 35.5 million private-sector jobs. During the current decade, America appears destined to lose more than 1.7 million private-sector jobs.

• This 1.3 million annual increase in the labor force means that in terms of private-sector payroll employment, the nation has to create an estimated 920,000 jobs per year.  Adding this to the actual private-sector job losses accumulated during the 20 months (to date) of recession equates to an August 2009 employment deficit of 8.6 million jobs. Given conservative estimates of further employment declines (even if the recession ends in the third quarter of 2009) and the continued increase in the labor force, the nation’s employment deficit could approach 9.4 million private-sector jobs by December 2009.

• Erasing this deficit will require substantial and sustained employment growth. Even if the nation could add 2.15 million private-sector jobs per year starting in January 2010, it would need to maintain this pace for more than 7 straight years (7.63 years), or until August 2017, to eliminate the jobs deficit! This is approximately 50 percent greater than the length of the average post–World War II expansion (58 months).

The “free-market” cannot and never will fix this.  It’s going to take the concentrated effort of the federal government working with the private sector to pull us out of this disaster.  Thanks again, Cons!

[h/t MB]

Bill in Portland Maine’s Excellent Question

Dear Conservative Free-Market Capitalism Muckety Mucks,

Why haven’t you fixed the economy yet?

It’s a shame it took a serial snarkist to ask the most pertinent question of this whole Great Recession.  Want more?

I’m asking because conservatives in fancy suits keep telling me—okay, screaming at me—about how fundamentally sound their ideas are, and how the private sector, not the government, is our best and greatest hope for making the economy leap back to life…

We’ve been in a recession since December of 2007. Why aren’t things all better yet for ordinary Americans? You were so awesome at making the mess, but cleaning up the pile of poopies you left on the nation’s living room rug seems to be proving a bit more, um, problematic. Why?

You’ve got an army of giant, throbbing brains in your right-wing think tanks working day and night. The Heritage Foundation has never been wrong…just ask ‘em! And the U.S. Chamber of Commerce never misses an opportunity to proclaim their infallibility in multimillion-dollar ad campaigns. So…why are we still in Sucksville?

And don’t try and hide behind the fact that there’s a Democrat in the White House. He’s been shoveling money into your coffers faster than Sarah Palin shoveling bullshit through Twitter.

Fix the damn economy on Main Street already, you Ayn Rand-worshipping free-market capitalist wizards. Show us how it’s done. Be the heroes we’ve been holding out for. I’ll check back on your progress in 30 days. I expect Americans to be squatting over solid gold commodes by then. That’s how much I believe in you.

They can’t, of course, because their version of the mythical “Free Market” isn’t designed to help the little person.  It’s always been designed to make the rich filthy rich.  It’s always been designed to screw the little person over.  But they’re damn fine questions.  And I know Billy will check back in 30 days.