I can draw only one of two conclusions: Either the Obama administration's economic advisers and their Congressional enablers are as dumb as a box of hammers and completely oblivious to the history of the first Great Depression, or they do know and are gambling with the nation's economy anyway - because they're afraid the Republicans might draw blood in the next election cycle:

WASHINGTON — Faced with anxiety in financial markets about the huge federal deficit and the potential for it to become an electoral liability for Democrats, the White House and Congressional leaders are weighing options for narrowing the gap, including a bipartisan commission that could force tax increases and spending cuts.

But even the idea of a panel to bridge the partisan divide has run into partisan objections. Many Democrats, including in the White House, are loath to cede such far-reaching decisions to a commission and doubt Republicans’ willingness to compromise. And most Republicans remain adamantly opposed to tax increases, leaving the prospects for any bipartisan approach limited at best.

The proponents, however, are pressing for a Senate vote this month. “If we have the same process and the same people, we are going to get the same results,” said Senator Evan Bayh, Democrat of Indiana, who recently met with Mr. Obama to discuss the idea. “The Democratic Party wants to spend more than we can afford, the Republican Party tends to want to cut taxes more than we can afford. So we are stuck.”

And of course, the grandstanding Mr. Bayh is the man who loves to agree with the Republicans.

Concerns about the deficit are building even as the White House and Congress continue to add to it with tax cuts and spending to stimulate a still-fragile economy. Yet those one-time costs do not trouble most economists and market analysts.

The main driver of long-term deficits is the chasm between the benefit programs Medicare and Medicaid, which are growing faster than the economy, and federal tax collections, which are at one of their lowest levels in many decades relative to the size of the economy.

Mr. Obama’s budget director, Peter R. Orszag, now at work on the president’s next budget, due in February for the 2011 fiscal year, declined to comment about a bipartisan commission and instead promised that the coming budget would propose additional ways to reduce the deficit beyond next year, when the economy is fully recovered.

Paul Krugman referred us to this just the other day:

Matt Yglesias makes a good point:

A lot of politicians and political operatives in DC are very impressed by polling that shows people concerned about the budget deficit. I think it would be really politically insane for people to take that too literally. If congress makes the deficit even bigger in a way that helps spur recovery, then come election day people will notice the recovery and be happy. If, by contrast, the labor market is still a disaster then people will be pissed off. It’s true that they might say they’re pissed off at the deficit, but the underlying source of anger is the objective bad conditions.

But the political argument against focusing on the deficit is even stronger than he realizes — because there are very good odds that even if Obama exhibited iron fiscal discipline, voters wouldn’t notice. There’s a remarkable, depressing paper by Achen and Bartels that includes an analysis of voter views of the deficit in 1996 — by which time the huge deficit that Bill Clinton inherited had been drastically reduced.

Here’s what voters thought they knew... Yep: after one of the biggest moves toward budget balance in history, a majority of Republicans, and a plurality of all voters, believed that deficits had increased.

Not to put too fine a point on it: if Obama succeeded in reducing the deficit, would Fox News or the Washington Times report it?

The truth is that the truth about budgets plays almost no role in real politics. Right now, Meg Whitman is campaigning for Governor of California on the claim that state spending has exploded over the last decade — when the fact is that it has fallen drastically in real per capita terms. Will she pay a price for this? Probably not.

So if I were a politician, I’d focus on providing real improvements in peoples’ lives, rather than seeking deficit reductions the public won’t even hear about.

Not to mention that in 1937, when FDR, under pressure from the Blue Dogs of his time, cut taxes and spending, it deepened and prolonged the Depression by driving unemployment back into double digits - and led to a major defeat in the 1938 mid-terms for the Democrats.

Cross-posted from Mouse Musings

Since the Bush administration’s legacy left the country suffering the worst economic crisis since the Great Depression, the number of unemployed has increased by 7.6 million to 15.1, and the official unemployment rate is just under 10%, For so many, just having a job – any crappy, horrible, badly-paid job – is better than no job at all. So few people are paying much attention to what is happening, and has been happening for quite some time, to those who are employed in what should be ‘good’ jobs; the increasing pressure on workers to work longer and harder, for less and less. Or else.

But sometimes the ‘or else’ isn’t just about losing your job. Let’s face it; there are some jobs where chronic fatigue and burnout are more hazardous than others. Flying for an airline for one. A few days ago, Northwest Flight 188 from San Diego to Minneapolis overflew the airport by more than 150 miles, out of radio contact with air traffic controllers for 80 minutes. Something sure as hell went very wrong 37,000 feet in the air with 147 unsuspecting passengers sitting in the back seats, and speculation is running rife about how two experienced and highly qualified pilots could possibly fly past their destination without either noticing. The chatter on just about every airline pilot forum is the same – suspicion falling on the most likely reason – the pilots simply… fell asleep. Luckily, no one died, except possibly two pilots’ careers.

Would be nice to think this was a one-off aberration. It’s not. A couple weeks ago, a Delta 767 with 195 passengers and crew landed in Atlanta on a taxiway instead of the runway, and investigators suspect fatigue as a factor; the crew had flown 10 hours and was landing at night. The third pilot, doing a checkride, had become ill during the flight, and was being cared for in the cabin as the other two pilots, distracted and tired, landed the jet on the wrong strip of asphalt. Not exactly the checkride they were hoping for.

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The next time some bobblehead starts talking about how this crisis "is about people living beyond their means", remind them of this latest proof that the financial services industry was thoroughly and aggressively corrupt, and that was a much bigger problem:

WASHINGTON -- As the housing market collapsed in late 2007, Moody's Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.

A McClatchy investigation has found that Moody's punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.

Instead, Moody's promoted executives who headed its "structured finance" division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now: "toxic assets."

As Congress tackles the broadest proposed overhaul of financial regulation since the 1930s, however, lawmakers still aren't fully aware of what went wrong at the bond rating agencies, and so they may fail to address misaligned incentives such as granting stock options to mid-level employees, which can be an incentive to issue positive ratings rather than honest ones.

The Securities and Exchange Commission issued a blistering report on how profit motives had undermined the integrity of ratings at Moody's and its main competitors, Fitch Ratings and Standard & Poor's, in July 2008, but the full extent of Moody's internal strife never has been publicly revealed.

Moody's, which rates McClatchy's debt and assigns it quite low value, disputes every allegation against it. "Moody's has rigorous standards in place to protect the integrity of ratings from commercial considerations," said Michael Adler, Moody's vice president for corporate communications, in an e-mail response to McClatchy.

Insiders, however, say that wasn't true before the financial meltdown.

"The story at Moody's doesn't start in 2007; it starts in 2000," said Mark Froeba, a Harvard-educated lawyer and senior vice president who joined Moody's structured finance group in 1997.
"This was a systematic and aggressive strategy to replace a culture that was very conservative, an accuracy-and-quality oriented (culture), a getting-the-rating-right kind of culture, with a culture that was supposed to be 'business-friendly,' but was consistently less likely to assign a rating that was tougher than our competitors," Froeba said.

After Froeba and others raised concerns that the methodology Moody's was using to rate investment offerings allowed the firm's profit interests to trump honest ratings, he and nine other outspoken critics in his group were "downsized" in December 2007.

Jeez, all we need now is one less liberal to push those damn Blue Dogs into doing the right thing. From Rep. Wexler's site:

“Today, I am announcing that I will be accepting the position of president of the Center for Middle East Peace and will leave Congress effective in January of 2010.

“More than anything, I want to thank the voters of Palm Beach and Broward Counties who have allowed me the privilege of representing our community in the United States House of Representatives and the Florida Senate for the past nineteen years. I have truly cherished the opportunity to serve my constituents – many of whom make up the generation that sacrificed in World War II and Korea and rebuilt our nation after the Great Depression.

“I have both admired and learned from my constituents, especially their love of country and commitment to community.

“I am proud that everyday I have sought to advocate for and provide a voice to my constituents: whether it was fighting for a legitimate vote during the 2000 election, working toward enacting a voter verified paper trail in Florida, or advocating for health care, education, Social Security and countless other issues. Therefore, my decision to leave Congress did not come easy.

“Those who know me, and those who have followed my career know that one of my overriding passions has been my work on the Foreign Affairs Committee helping to strengthen and preserve the unbreakable bond between the United States and Israel, and working toward a just and comprehensive peace in the Middle East between Israelis and Palestinians and between Israel and the Arab world. Additionally, I have made a special effort to improve congressional relations with key allies in the Muslim world by founding the Turkey and Indonesia caucuses. Moreover, it was an extraordinary honor to serve as a Middle East advisor to President Obama during the presidential campaign, and I treasure the experiences I had traveling the country, and especially throughout Florida, advocating for the President’s Middle East agenda.

“Taking over as president of the Center for Middle East Peace offers me an unparalleled opportunity to work on behalf of Middle East peace for an important and influential non-profit institute. After much discussion with my family, I have decided that I cannot pass up on this opportunity.

“My one regret is that I will be unable to complete my current term in office, but I truly believe there is no time to waste. We are at a unique and critically tense moment in the history of the Middle East with both significant opportunities to succeed in the Arab-Israeli conflict as well as major challenges involving Iran, Hamas, and al Qaeda. In the coming months, Israeli and Arab leaders will be faced with monumental decisions that will dramatically affect the region and the entire world for decades to come. Critically important American security and foreign policy interests are also at stake. I am convinced that now is the time for me to engage on these issues on a full time basis.”

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Do ya think? Not only did Anita Dunn take a really strong stand for President Obama over the Roger Ailes run FOX Noise Propaganda Network, she also called out the conservative-teabagger movement in its entirety.

Dunn: A week ago many conservative commentators had been rejoicing in the fact, celebrating in the fact that the United States didn't get the Olympics, one week later they seem to be somewhat bitter at the fact that an American President was awarded the Nobel peace prize. So I think people will draw their own conclusions abut the reflexive negativity on the part of some commentators regardless of what happens...

Dunn held back no punches and stated fact. That's nice to see.
Howard Kurtz was pretty comical with his questions, but he was trying to provide some pushback, I guess.

KURTZ: You were quoted this week in Time Magazine as saying of Fox News, it's opinion journalism masquerading as news. What do you mean, "masquerading"?

See what I mean? But he did have to ask that.

DUNN: Well, you know, Howie, I think if we went back a year ago to the fall of 2008, to the campaign, that, you know, it was a time that this country was in two wars, that we'd had a financial collapse probably more significant than any financial collapse since the Great Depression. If you were a Fox News viewer in the fall election, what you would have seen would have been that the biggest story, the biggest threats facing America were a guy named Bill Ayers and something called Acorn, when the reality of it is that Fox News often operates almost as either the research arm or the communications arm of the Republican Party.

Yep, that sums up FOX Noise. Then she delivered the knockout punch.

Think Progress writes:

Last month, President Obama appeared on five Sunday morning talk shows, including Univision’s Al Punto. He rejected Fox, however. Dunn revealed this morning that Obama did not appear on Fox because of its reflexive, partisan opposition to Obama. Obama will go on Fox in the future, Dunn said, but when he goes on, “he’s going on to debate the opposition.”

And then after Kurtz asked her if the president would go on FOX ever again, she said this too:

Dunn: That when he goes on FOX, he understands he's not going on, it really isn't a news network at this point, he's going to debate the opposition and that's fine.

The opposition, I loved that.

Howard asked someone from FOX to appear on Reliable Sources, but they refused and instead issued their usual statement. They'd rather have BillO speak to his audience than have anybody debate the facts -- especially, of course, on another network. FOX gives their usual argument that while they do have news, people really rely on their opinion programs. That's stunning really. MSNBC has their lefty hosts too, but during the day, you'll hear all the news and not MSNBC's opinion version of the news.

Kurtz did his best to find a few reporters that he thought weren't corrupted by Ailes so he mentioned Major Garrett. Do you think he's fair...Please say he's fair...Oh please oh please oh please. And Anita then calmly explained why they didn't go on Chris Wallace. Good for her.

And I told Major quite honestly that we had told Chris Wallace that having fact-checked an administration guest on his show -- something I've never seen a Sunday show do. And, Howie, you can show me examples of where Sunday shows have fact-checked previous weeks' guests, and I'd be happy to see those. We asked Chris, for an example, where he had done that to anybody besides somebody from the administration in the year 2009. And we're still waiting to hear from him.

She didn't stop there.

Dunn: Let's be realistic here, Howie. They are widely viewed as, you know, a part of the Republican Party. Take their talking points, put them on the air. Take their opposition research, put them on the air, and that’s fine. But let’s not pretend they’re a news network they way CNN is.

Kurtz did his best to try and get her to differentiate between the Beck's show and their little news nuggets, and she wouldn't back down. Where's the John Ensign coverage? she asks Howie. Hmmm, you won't see it much -- if at all -- on FOX. And that's only one example out of thousands.

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Matt Taibbi visits the set of the Ed Schultz show to discuss his article at Rolling Stone, The Great American Bubble Machine - Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression . From the magazine:

In Rolling Stone Issue 1082-83, Matt Taibbi takes on "the Wall Street Bubble Mafia" — investment bank Goldman Sachs. The piece has generated controversy, with Goldman Sachs firing back that Taibbi's piece is "an hysterical compilation of conspiracy theories" and a spokesman adding, "We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance in being a force for good." Taibbie shot back: "Goldman has its alumni pushing its views from the pulpit of the U.S. Treasury, the NYSE, the World Bank, and numerous other important posts; it also has former players fronting major TV shows.

I wish I'd been paying closer attention to this, because now I have a whole lot of questions that weren't there before I read Matt Taibbi's latest story for Rolling Stone: "How Goldman Sachs took over Washington by engineering every major market manipulation since the Great Depression."

But first, the "good" news:

WASHINGTON -- Landmark legislation to curb U.S. greenhouse gas emissions was approved by the House of Representatives in a close vote late Friday, securing a hard-fought victory for a cornerstone of President Barack Obama's agenda.

After months of negotiations, the Democratic-controlled House has narrowly passed sweeping legislation calling for the nation's first-ever limits on pollution linked to global warming. Stephen Power explains the bill's implications.

The 1,200 page bill—formally known as the "American Clean Energy and Security Act"—will reach into almost every corner of the U.S. economy. By putting a price on emissions of common gases, such as carbon dioxide, the bill would affect the way electricity is generated, how homes and offices are designed, how foreign trade is conducted and how much Americans pay to drive or to heat their homes.

Talking about how very deeply Goldman Sachs is embedded in the investors that will profit from cap-and-trade, Taibbi says:

Well, you might say, who cares? If cap-and-trade succeeds, won't we all be saved from the catastrophe of global warming? Maybe - but cap-and-trade, as envisioned by Goldman, is really just a carbon tax so that private interests collect the revenues. Instead of simply imposing a fixed government levy on carbon pollution and forcing unclean energy producers to pay for the mess they make, cap-and-trade will allow a small tribe of greedy-as-hell Wall Street swine to turn yet another commodities market into a private tax-collection scheme. This is worse than the bailout: It allows the bank to seize taxpayer money before it's even collected.

"If it's going to be a tax, I would prefer that Washington set the tax and collect it," says Michael Masters, the hedge-fund director who spoke out against oil-futures speculation. "But we're saying that Wall Street can set the tax, and Wall Street can collect the tax. That's the last thing in the world I want. It's just asinine."

Cap-and-trade is going to happen. [Ed. note - this was published yesterday.] Or, if it doesn't, something like it will. The moral is the same for all the other bubbles that Goldman helped create, from 1929 to 2009. In almost every case, the very same bank that behaved recklessly for years, weighing down the system with toxic loans and predatory debt, and accomplishing nothing but massive bonuses for a few bosses, has been rewarded with mountains of virtually free money and government guarantees - while the actual victims in this mess, ordinary taxpayers, are the ones paying for it.

It's not always easy to accept the reality of what we now routinely allow these people to get away with; there's a kind of collective denial that kicks in when a country goes through what America has gone through lately, when a people lose as much prestige and status as we have in the past few years. You can't really register the fact that you're no longer a citizen of a thriving first-world democracy, that you're no longer above getting robbed in broad daylight, because like an amputee, you still sort of feel things that are no longer there.

But this is it. This is the world we live in now. And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework until the end of time, plus 10 billion free dollars in a paper bag to buy lunch. It's a gangster state, running on gangster economics, and even prices can't be trusted anymore; there are hidden taxes in every buck you pay. And maybe we can't stop it, but we should at least know where it's all going.

RS hasn't put it online but really, I strongly recommend buying the issue to support this kind of journalism.

You can read some comments on the piece here, here and here.

Oh, and you can read a related Taibbi piece here.

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Why exactly does George W. Bush think he has even a smidgen of credibility when discussing economic issues? Here's what he said yesterday:

"I know it's going to be the private sector that leads this country out of the current economic times we're in," the former president said to applause from members of a local business group. "You can spend your money better than the government can spend your money."

Repeatedly in his hourlong speech and question-and-answer session, Mr. Bush said he would not directly criticize the new president, who has moved to take over financial institutions and several large corporations. Several times, however, he took direct aim at Obama policies as he defended his own during eight years in office.

"Government does not create wealth. The major role for the government is to create an environment where people take risks to expand the job rate in the United States," he said to huge cheers.

Brian Williams briefly mentioned it in his newscast yesterday, pointing out that it was actually Bush who signed the first bailout packages for the banks and auto and insurance industries. But that was really only the half of it.

Ed Shultz, on his MSNBC show yesterday, did an admirable job of tackling the rest of the matter:

What did he do? Attack the president of the United States and basically did what he does pretty well, which is rewrite history. Now Bush is babbling, trying to make sense out of the worst eight years this country has ever had since the Great Depression.

And if he‘s going to go out and do this, and I think we need to remind the American people, and I think we have an obligation to say this—Bush gave us what? Record deficits, record foreign debt, record trade deficits, butchering the middle class, letting the financial sector run wild with absolutely no oversight. Those are a just a few things—I don‘t have a whole hour to do this, but the American people are not stupid. Our new NBC News poll proves this. The American people do not blame Barack Obama for the fiscal condition of this country.

Here are the numbers. Fifty-three percent say that Bush and the congressional Republicans are to blame. Only six percent blame President Obama. Now, weeks ago, the president said he didn‘t want to second-guess the current president. That‘s exactly what he‘s doing. Bush is lying and he is setting the framework for the Republicans to make the case against President Obama at a very tough time. Gosh, how one speech can change people. It‘s almost like the state of the union address, the 16 words.

This is the last person that anybody in the Obama administration should pay attention to. Bush has no credibility. He has no authority. He has no clue what‘s going on. You see, he didn‘t stop with the economy. Brainless Bush went out and goes after, with a generic statement about health care reform. He really cared about that. He goes on to say, “There are a lot of way to remedy the situation without nationalizing health care.” He also said - “You can spend your money better than the government can spend your money.” I tell you what, just a couple of dandies out there on the rubber-chicken circuit.

This is a man who sat there for eight years—eight years—and did absolutely nothing when it comes to the number one issue in this country for families, which is health care. He told you to go out and get a private savings account. This is vintage Bush, appealing to the lowest common denominator when it comes to the problems we face as a country. I guess you could say that things haven‘t changed. They think we‘re stupid. But in the words of the former president, “Fool me once, you can‘t get fooled again, or whatever that was.”

Thanks, Ed. Somebody needed to say it. Too bad you seem to have been one of the few doing so.

HOURS DECLINE FOR EMPLOYED

"The humanitarian benefit of unemployment insurance also causes people to look with less intensity for a new job." - James Sherk, labor economist at the conservative Heritage Foundation.

Don't you love it? Record layoffs, hiring contractions everywhere, and the wingnuts blame people who can't find the non-existent jobs. Or, even worse, the people who can't afford to work for $5 an hour. Geeze, they're all about economic self-interest: "What should I do - keep the unemployment checks that at least cover the bills, or take a minimum wage job that puts me in the red?" Wouldn't you think they'd get that simple equation?

These people are either nuts, or just plain amoral. What do you think?

People who still have jobs are faring worse than at any time since the Great Depression, a USA TODAY analysis of employment data found. Furloughs, pay cuts and reduced hours are taking a toll on workers who so far have escaped job cuts.

The employed worked fewer hours in May — an average of just 33.1 hours a week — than at any time since the Bureau of Labor Statistics began counting in 1964. Part-time work is at a record high. Overtime is at a record low.

The magnitude of job losses — 6 million jobs gone, a 9.4% unemployment rate — has overshadowed the groundbreaking nature of the nation's employment troubles, especially the financial decline of those still working.

"You can rip a whole chapter out of your Economics 101 textbook because the job market isn't behaving the way we were taught," says David Rosenberg, chief economist at money manager Gluskin Sheff and Associates.

Even working people have less to spend.

Businesses cut total wages at a 6.2% annual rate in the first quarter. Federal, state and local governments increased spending on wages by 6.1%, offsetting some of the decline.

The use of pay cuts — the last choice at most companies after hiring freezes, salary freezes and layoffs — shows how the recession is unlike any since the Depression, says Laura Sejen of compensation consultant Watson Wyatt.

"The recession has been broad, deep and long. No one has been immune," she says.

Baby boomers— 79 million people born from 1946 to 1964 — have been hit particularly hard.

Unemployment rates for workers 45 and older have soared to their highest level since at least 1948, when the government started tracking it.

Job losses for baby boomers come at a difficult time: during the traditional peak earning years, as retirement nears.

"It's hard for an older worker to compete in the job market with younger guys and women. The jobs may not pay what they were making," says Austin Sargent, an economist with Utah's Department of Workforce Services.

The average time a person has been out of work is at a post-Depression record of 22.5 weeks.

Congress' approval of higher and longer unemployment benefits may contribute to the extra time spent between jobs, says James Sherk, a labor economist at the conservative Heritage Foundation.

"The humanitarian benefit of unemployment insurance also causes people to look with less intensity for a new job," he says.

I'm not too optimistic about this improving matters. How can you ever foresee every potential conflict when they're all in bed with each other? Break these "too big to fail" companies up and make them smaller, that's what I say!

Senior administration officials are considering the creation of a single agency to regulate the banking industry, replacing a patchwork of agencies that failed to prevent banks from falling into the worst financial crisis since the Great Depression, sources said.

The agency would be a key element in the administration's sweeping overhaul of financial regulation, which officials hope to unveil in coming weeks, including the creation of a new authority to police risks to the financial system as well as a new agency to protect consumers, according to three people familiar with the matter. Most of the proposals would require legislation.

"The president is committed to signing a regulatory reform package by the end of the year, and officials at the White House and the Treasury Department are continuing work with Congress on the final phases of a proposal, but there is no final proposal in place and any announcement will not be for a couple of weeks," said White House deputy spokesman Jennifer R. Psaki.

Senior officials have reached agreement on aspects of the plan, according to a person familiar with the discussions.

They favor vesting the Federal Reserve with new powers as a systemic risk regulator, with broad responsibility for detecting threats to the financial system. The powers would include oversight of previously unregulated markets, such as the derivatives trade, and of market participants such as hedge funds.

Officials also favor the creation of a new agency to enforce laws protecting consumers of financial products such as mortgages and credit cards.

And they want to merge the Securities and Exchange Commission and the Commodity Futures Trading Commission, which share responsibility for protecting investors from fraud.

Other aspects of the plan remain under discussion, sources said, speaking on condition of anonymity because they were not authorized to disclose details.

Among these ideas is the creation of a single agency to regulate banks. The new regulator would assume responsibility for the safety and soundness of banks, currently divided among the Fed and three other agencies: the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corp. The OCC and the OTS would probably disappear, while the Fed and the FDIC would retain other responsibilities.

Under the current system, banks can choose their regulator. Because the OCC, OTS and FDIC are funded by fees from the banks, the regulators have an incentive to compete for business by offering more lenient oversight. The system also divides supervision of the largest financial conglomerates among multiple agencies, each with responsibility for certain subsidiaries, creating gaps in coverage that companies have exploited. Many experts say these failures of regulation contributed to the financial crisis.

Gee, ya think?

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From Bill Moyers Journal April 24, 2009.

Like thunderheads roiling on the horizon, the clamor has been building as more and more Americans want to know exactly what, and who, brought on the worst economic crisis since the great depression. What happened and how do we keep it from happening again?

Congress has finally acknowledged the outcry and is supporting some 21st century version of the "Pecora hearings."

"Pecora hearings?" That's right, as in Ferdinand Pecora, the savvy immigrant from Sicily who became a Manhattan prosecutor with a memory for facts and figures that proved the undoing of a Wall Street banking world gone berserk with greed and fraud.

In the early 1930's, during the Great Depression, and under threat of subpoena, one tycoon after another, including J.P. Morgan Jr., was hauled before the Senate Banking Committee and grilled by Pecora, the committee's chief counsel.

Here he is on the cover of TIME Magazine in June 1933. "Wealth on Trial" reads the headline inside, where Pecora is described in ethnic stereotypes of the day as "The kinky-haired, olive-skinned, jut-jawed lawyer from Manhattan." To their shock, pompous financiers, unaccustomed to having their actions or integrity questioned by anyone, much less some pipsqueak legalist making $255 a month, were no match for his cross examination.

The revelations of the Pecora hearings and the public's anger led to sweeping reform, reining in the high-handed, free-wheeling banking industry. Those reforms stabilized our financial world for half a century, until the titans of finance and friendly politicians began to dismantle them.

Ferdinand Pecora, your time has come again. Your biography is being written by this man, Michael Perino. A scholar of Law and Securities Regulation, Michael teaches at St. John's University here in New York, and has been an advisor to the Securities and Exchange Commission, the government agency that was created because of the Pecora investigation.

And, returning to the JOURNAL is Simon Johnson, former Chief Economist at the International Monetary Fund who now teaches at MIT's Sloan School of Management. Just this week Simon Johnson co-founded "The Hearing," a new economics blog at washingtonpost.com.

Transcript below the fold.

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From the White House blog:

With the process of going through the budget line by line in full swing, the President uses his Weekly Address to give some examples, big and small, of how the Administration is working to cut costs and eliminate waste. The President also announces two new key appointments, Jeffrey Zients as Chief Performance Officer and Aneesh Chopra as Chief Technology Officer, who will be invaluable in streamlining the way government functions through efficiency and innovation.

Full transcript below the fold.

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Oh, to live in that happy place where Fox News resides: where the sun shone out of Ronald Reagan's behind, and FDR, not Hitler, was the real villain of his time...

After Wise Men Mort Kondracke and Fred Barnes pull their chin hairs and speak in somber tones about how Obama's economic stimulus package will actually hurt the economy - just like FDR's New Deal did - they wax rhapsodic over Reaganomics. (After tsk-tsking about unions quite possibly wrecking the economy under Obama, of course.)

I, too, have fond memories of Reaganomics. Why, until Reagan waved his magic wand, our unemployment checks weren't even taxed! I was absolutely thrilled to be able to make that sacrifice to fund tax cuts for the wealthy:

Another Reagan proposal that came in for criticism was the plan to tax all unemployment compensation.

[...] "What he's doing is taxing something to a person who is under a rough time to begin with," noted Herbert Paul, a New York tax lawyer. "But you don't seem to have a strong lobby group to push to eliminate that, so I think it may well stick."

And stick it did. Why, thanks to Reagan's Tax Reform Act of 1986, I only recently finished paying the taxes (and interest) due on unemployment income from 2001 - and here I am, unemployed again, thanks to yet another Republican-sponsored economic crash.

But I digress. The fact is, facts simply aren't relevant to Republicans, since their economic views and objects of veneration are more appropriate to a religious cult than intellectual rigor. (You might want to get Will Bunch's new book for a look at this phenomena - and why it's so important.)

I'm not going to pick apart the specifics of everything Morton Kondracke and Fred Barnes said, because they're only interchangeable players in the larger conservative game plan. We've seen just about every possible Republican bobblehead spouting this same nonsense in the past few weeks, fresh off the RNC talking-points fax machine.

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