Below is a video from NBC’s Today show.

Matt Lauer asked President Clinton what business leaders say is the thing that most prevents them from investing their hoards of cash in new hiring. The number one thing that Clinton mentions is the fact that demand is weak. The business leaders are not sure that if they hire, the products they make will get sold. (It’s funny how Nightly Business Report is asking the same question of business leaders night after night and they never get that answer at all let alone as the most important problem. Notice also that this issue is not the one NBC chose for the headline.)

I think President Clinton gets it mostly right. He goes a little off track in answering how to get the consumer to spend more. Rather than telling the consumer to buck up and have a little courage, he could have reiterated his ideas on mortgage relief as a way to free up the consumer from the fear of the loss of their house. I imagine that for some people the thought of being 10s of thousands of dollars underwater on their mortgages doesn’t make them feel confident to go out and spend a lot of their $1,500 tax cut.

Then he could have talked about the government consumption stimulus in spending for public works and supporting the rehiring of teachers. People who have jobs tend to spend more freely than the unemployed do. The spending by the newly employed makes consumer demand increase to the point where other people are hired to satisfy this new demand – rinse and repeat.

He could then mention that after these two major ways of stimulating the consumer spending had been put in place, a little political jaw-boning might help.

An action like the tax cut that will only stimulate the economy if those darn real people would only behave the way we wanted them to, reluctant though they may be, is not nearly as effective as one that takes the more direct route of the government just spending the money to buy stuff.

Maybe instead of giving the $1,500 tax rebates in cash, the government ought to run it like a credit card company’s reward redemption plan. The rebate could be redeemed for products, but not for cash.

The Boston Globe ran the story headlined Obama backs off from summer deals. The first pargraph says:

When President Obama announces at least $2 trillion in long-term deficit reduction measures today, he will not include all the compromises he reached with House Republican leaders before budget cutting talks broke off.

Since when are bargaining positions in negotiations that never reach a conclusion called deals? Is this an attempt by The Boston Globe to outfox Faux Noise in the field of biased journalism?

Perhaps The Boston Globe has never heard the negotiating ploy, “This is the deal, take it or leave it.”  The Republicans decided to leave it.  They cannot expect to take it latter.  Once the left it the proposed deal was “off the table” to put it in words that Republicans understand.

Obama’s taking up proposals that Republicans once made and reject after he proposes them is not quite the same thing as choosing a different strategy when your first one is rejected.  Yet there is enough similarity that the Republicans ought to understand a deal is not a deal until both sides agree to it.

Conveniently, the new incarnation of The Boston Globe web site does not allow comments yet.  Perhaps this blog post will have the same effect as my other post, The New York Tines Wages Class Warfare, had on The New York Times.

In the story America’s debt battle about the President’s latest tax the rich scheme, the article states:

In a defiant note, administration officials made clear Sunday that Mr. Obama would veto any Medicare benefit cuts that aren’t paired with tax increases on upper-income people.

Nice counter to the Republicans’ claim that tax increases are off the table.

Where has this Obama been hiding for the last three years?  Maybe all the grumbling and grousing from Obama’s base of supporters has finally gotten through.  You don’t suppose the letters I sent to his re-election campaign explaining why I am not sending a donation had an effect?

An article on the UK Daily Mail, Gamers solve puzzle which stumped scientists for years and could hold key to curing AIDS, starts off with:

Videogame players have solved a molecular puzzle that stumped scientists for years and could hold the key to finding a cure for AIDS.

A team of gamers needed just ten days to produce an answer to an enzyme riddle that had eluded experts for more than a decade.

All you parents (and spouses) who think game playing is a waste of time, take heed.

The article from The New York Times is headlined Obama Plan to Cut Deficit Will Trim Spending by $3 Trillion.

President Obama will unveil a deficit-reduction plan on Monday that uses entitlement cuts, tax increases and war savings to reduce government spending by more than $3 trillion over the next 10 years, administration officials said.

Really?  The New York Times?  Even though my expectations of The New York Times is very low, I did expect better from them.  Do they really think tax increases amounts to trimming spending?  What dictionary do they use?  Actually, the reason this raises my hackles so much is this kind of idiocy is not limited to The New York Times.  Many times you see in the media the conflation of deficit reduction with spending reduction.  They are not the same thing.  Deficit reduction is the decrease of the amount by which spending exceeds revenues.  There are two ways to reduce the deficit, only one of which is cutting spending.  Do I have to remind them that increasing revenue is the other way to cut the deficit?  If you misuse and abuse language this way, you are distorting the news.  Sometimes I think  The New York Times motto ought to be “All the news we can distort”

This article is just one example of the report about the Republican reaction to the proposal which has not even been formally announced yet.

That proposal, which was disclosed on Saturday, was met with derision Sunday by Republican lawmakers, who said it amounted to “class warfare” and a political tactic intended to portray his opponents as indifferent to the hardships facing middle-class Americans.

Where is Ronald Reagan when you need him to turn to these Republicans and pejoratively say, “Well, there they go again.”

President Obama might remind the Republicans that the Democrats did not choose to wage class warfare. The Republicans started the war in earnest in 1980 and they have been waging it ever since.  For far too long the Republicans have been trying to keep us from talking about the war they are waging.  They want us to just sit back and let them wage this war against us and put up no resistance.

Like any criminal, they might have been able to get away with their crime if they had only been satisfied with what they had already taken.  What is getting them into trouble is their constant drive to steal more from the middle-class.  They have been repeating the crime so often that the public detectives have finally started to get enough clues to figure out who the culprits are.  Sooner or later these detectives will have enough evidence to convict them in the court of public opinion and finally in the vote.  (I only wish I could predict whether it will be sooner or it will be later.)

September 19, 2011

The same link as originally posted now has the article headlined Obama to Offer Plan to Cut Deficit by Over $3 Trillion.

The first paragraph now reads:

President Obama will unveil a plan on Monday that uses entitlement cuts, tax increases and war savings to reduce the federal deficit by more than $3 trillion over the next 10 years, administration officials said.

At the end of the article the correction is explained.

This article has been revised to reflect the following correction:

Correction: September 19, 2011

An earlier version of this article, and a headline on the Web, mistakenly referred to a figure of more than $3 trillion as the amount of federal government spending that President Obama’s plan would cut. The $3 trillion figure should have referred to the amount the plan would reduce the deficit over 10 years; $1.5 trillion of that deficit reduction will come from tax increases, not spending cuts. The article also gave an incorrect date for the deadline for the bipartisan Congressional committee to come up with its own cuts. It is Nov. 23, not Dec. 23.

Here are a few paragraphs from the article Save the United States and Israel From Themselves.

A State Department official has confirmed that the United States intends to veto the expected Palestinian demand for U.N. Security Council recognition as a member state. The U.S. Congress, moreover, under pressure from Israel’s American friends, has declared that it will then cut off funding for the Palestinian Authority.

Egypt and the Arab governments will be angry, but the Arabs have been angry before with the invulnerable United States, and nothing has come of it—except for the 9/11 attacks and a war “on terror” that has gone on for a decade.

Turki al-Faisal, the former head of Saudi intelligence and former ambassador to the U.S., has rather desperately been trying to warn America. He has published his warning in articles in The Washington Post and The New York Times, and circulated it on the Web. He writes that, if Washington vetoes the Palestinian petition, “American influence will decline further, Israeli security will be undermined and Iran will be empowered, increasing the chances of another war in the region.”

A veto will provoke uproar among Muslims everywhere. Everyone already knows this, but the Obama administration ignores it.

Unfortunately, it is counterproductive to try to tell Americans of the possible dire consequences of their actions.  Such warnings elicit the rugged individualist in the American psyche.  We feel that we cannot give into threats, so we will almost feel forced to take the action being warned about to prove that we are not easily frightened.

You can see the train wreck coming, but there is almost nothing that can be done about it.

Given the resounding defeat of the Democratic candidate for US Representative  in New York’s district 9 supposedly to send a message to Obama about his stance on Israel, it would take an exceptionally brave politician to do the right thing.

The US State Department is not sending out any signals of such bravery.  In fact all the signals are in the opposite direction.

It is already far too late to do the right thing.  If the United States were going to allow the vote to go through with no veto, it would have been wisest to let Israel know about this intention long ago.  That would have given Israel the chance to change their own behavior before the vote.  That opportunity seems to be already lost.

This article, Obama to Propose Tougher Tax Regime for Wealthy, comes from of all places, The Wall Street Journal. Of course, they mention that initial reports of this may have started with The New York Times.

Form The Wall Street Journal version we have the following paragrapsh:

The general goal would be to prevent people earning more than a million dollars to pay taxes at a lower effective rate than people who earn under $250,000. That’s often the case because investment income, or capital gains, is taxed at a lower rate than regular wages.

…

On taxes, he’ll call for lower, flatter tax rates, while also pushing for some tax increases. The White House has already proposed limits on the amount of tax deductions wealthy Americans can claim, and administration officials want tax rates to increase for families making more than $250,000 a year.

The first paragraph seems to be the kind of change that is sorely needed.

The only way for me to keep calm when I hear that Obama is calling for “lower, flatter tax rates”, as in the second quoted paragraph, is to also pay attention to the words “effective rate” in the first quoted paragraph. I could only agree that “lower, flatter tax rates” could be a good idea if this applies only to the “nominal rates”, which the wealthy do not pay, while the “effective rates” of what the wealthy actually paid were made steeper and higher.

The article Obama Co-Opts the Labor Movement is on the Truth Out web site.

I’ll quote two of the incendiary paragraphs in the hope that you will be enticed to read the article.

Before Obama’s so-called big job speech, the AFL-CIO was demanding – as part of their America Wants to Work Action Plan – a job program that would put to work the “… 25 million people in America who need full-time work …” This was to be done by investing “… at least $2.2 trillion in repairing our crumbling 20th century infrastructure and another $2 trillion building a modern clean energy infrastructure for the 21st century.” These numbers accurately reflect the needs of millions of working people while taking into consideration the gigantic shift in our economy necessary to help prevent future environmental disasters.
…
Without substantially raising taxes on the rich – not simply eliminating the Bush tax cuts – enough jobs cannot be created for all who need them. Social Security, Medicare and Medicaid cannot be salvaged either, without raising taxes on the rich, not to mention dealing with the federal, state and local budget deficits. Massive demonstrations must be organized to demand these actions; pleading with Democrats has failed miserably and consequently has weakened the labor movement at a time when there is no time to waste. The only way to bypass the “bi-partisan bickering” in Washington, DC, is to hit the streets with solid demands; politicians will either follow suit or be trampled on.

The article Five Biggest Right-Wing Lies about Solyndra is on the Nation Of Change web site. You’ll have to read the article to see the justification for calling the following items big lies:

5. The biggest investor in Solyndra was an Obama donor.
4. Green energy is a bad investment.
3. The government lost money “picking winners and losers.”
2. The Solyndra loan was rushed or pushed.
1. Something bad happened.

Here are the beginning and ending paragraphs of Matt Taibbi’s story, The $2 Billion UBS Incident: ‘Rogue Trader’ My Ass.

The news that a “rogue trader” (I hate that term – more on that in a moment) has soaked the Swiss banking giant UBS for $2 billion has rocked the international financial community and threatened to drive a stake through any chance Europe had of averting economic disaster. There is much hand-wringing in the financial press today as the UBS incident has reminded the whole world that all of the banks were almost certainly lying their asses off over the last three years, when they all pledged to pull back from risky prop trading.
…
Sooner or later, this is going to blow up in our faces, and it won’t be one lower-level guy with a $2 billion loss we’ll be swallowing. It’ll be the CEO of another rogue firm like Lehman Brothers, and it’ll cost us trillions, not billions.

I have read a few headlines on the “rogue trader” story, and figured that it was a story I could safely ignore. Now this wake-up call of a story is giving me second thoughts.

Some of the reader comments on the story are scarier than the story itself.  Here is the comment from a poster named Matt Dubuque:

Matt, I USED TO BE A MARKET MAKER IN DERIVATIVES>>> Please contact me at onehundredtrees@gmail.com.

THE REAL SCANDAL behind this story is “synthetic ETFS” which are going to be the next big thing to blow up on our faces after the “synthetic CDOs” blew up.

Tens of millions of Americans have invested in exchange traded funds (ETFs) WHICH THEY THINK represent purchase of baskets of securities to track a given economic trend such as the price of gold or technology stocks.

That USED TO BE THE CASE.

But now with “synthetic” ETFs, traders like this fellow are NOT investing in gold futures or tech indices. FAR FROM IT.

WHAT THEY are doing is investing in “proxy” indicators for those indicators in the form of NAKED credit default swaps (oh no, not AGAIN), whose CORRELATION to the underlying asset is CHOCK FULL of stupid assumptions.

CDOs based on subprime mortgages were clearly harmful to the financial system; what made that whole experience CATASTROPHIC was when “synthetic” CDOs exploded on to the scene and into the value of our mortgages.

Same thing with synthetic ETFs, which is what this guy was trading in.

This is just the first tiny explosion.

For some corroboration of what Matt Taibbi and Matt Dubuque wrote, I found the UK Guardian story UBS, the big bank that can’t stay out of trouble, shakes the City again.

It was the investment bank that plunged UBS into multibillion-pound losses during the credit crunch because of its exposure to toxic US sub-prime mortgages and related derivatives. Today, the same unit is at the centre of an inquiry on opaque exchange traded funds (ETFs). These complex financial products allow speculators to bet on price rises or falls in a vast range of indices, currencies and commodities, from the FTSE 100 to gold and even “leveraged live cattle”, without having to buy shares or commodities directly themselves.

…
Commentators said it was remarkable that the scandal had been uncovered in the same week as the publication of the Vickers report on UK banking reform, which proposes that banks’ high street operations should be ringfenced from riskier “casino” investment banking. “It could have been written with UBS in mind,” says one analyst.