Posts Tagged ‘bailout’

We’re learning a bit more about the “unprecedented powers” that President Obama and Sec. Treas. Geithner are seeking to deal with instability that exists in the financial system. But to understand what’s needed going forward, it’s important to see how we got here.

In the 1920s, commercial banks were selling stocks to their customers in addition to making loans and taking deposits.  As stock prices rose, buying on margin became the way to leverage money into larger gains.  For example, you could buy 100 shares of stock, pay a portion and borrow the rest from the bank or brokerage house.  That worked so long as the prices continued to climb.  But as prices started to fall, the banks insisted that buyers cover their loans.  If you didn’t have the cash, you had to sell some or all of your shares, thus forcing the price even lower.  Not only were individuals speculating, but so were the banks themselves, and when the banks were no longer able to cover requests for withdrawals, panic ensued.  There had been previous panics, but nothing like what happened at the start of the Depression. Over 4,000 banks failed. Deposits were not insured.  If your bank failed, you were out of luck.

In 1933, the government passed the Glass-Steagall Act.  It established the FDIC to insure deposits and provide for an orderly take-down and resolution of failing banks.  (Banks pay into the FDIC insurance fund, and the taxpayers make up any overages.) We take the FDIC for granted, knowing that as depositors we will be made whole (currently up to $250,000) if our bank fails.  But that security came with restrictions and regulations for the banks.  To limit speculation, Glass-Steagall also separated financial institutions — commercial banks, investment banks, and insurance companies — based on the type of business they did.

All went well until we forgot the lessons of the Depression, and once again the siren song of laissez-faire economic theory took hold.  The Depository Institutions Deregulation and Monetary Control Act of 1980 allowed banks to merge.  It also gave banks, rather than the Federal Reserve, the power to set interest rates on deposits.  Two years later, the Garn-St. Germain Depository Institutions Act deregulated the savings and loans, and adjustable rate mortgages were allowed.

Within a decade, the savings and loan industry in the United States collapsed.  The cause of individual failures varied, but a common factor seems to have been the combination of reduced regulation, a lack of oversight, and the introduction of new and unproven financial instruments.  Loan underwriting got sloppy, and there were home equity credit cards.  Again, so long as prices climbed, all was well, but when other economic factors caused a slump in real estate prices, those credit cards resembled the margin buying of the 1920s.  The number of savings and loan failures swamped FSLIC, the S&L version of the FDIC, and The Resolution Trust corporation was established to dispose of the failed institution’s assets, i.e., the loans on their books and the bank-owned properties.  Many of these institutions were purchased by banks so that for depositors, life went on.

Despite all this, the pressure for additional deregulation continued.  In 1999, Congress passed and President Clinton signed the Gramm-Leach-Bliley Act.  It repealed that portion of Glass-Steagall that prohibited the mixing of commercial banks, investment banks, and insurance companies.  A series of mergers followed, and a new raft of exotic financial instruments was born.  It was a perfect storm, and the consequences were completely predictable. In fact, Senator Byron Dorgan (D-ND) was eerily prescient at the time, predicting the timing as well as the need for massive government bailouts and putting a lie to any who claim that nobody could have foreseen the current crisis.  One simply needed to remove ideological blinders and look at history.

When word first came that the administration was seeking new regulations, I hoped that they repeal Gramm-Leach-Bliley along with some of the other deregulatory actions and reinstitute Glass-Steagall.  But alas, it seems that the effects of Gramm-Leach-Bliley will be as difficult to undo as are those credit default swaps that sank AIG.

If financial institutions have combined into these new hybrid, uber-institutions, then it makes sense that to have regulations that apply to all aspects of their business.  And it also makes sense that we need a mechanism to ensure an orderly take-down should they fail.  FDIC works well, and it can serve as a model for any new mechanism.  I still hope Congress will re-think the wisdom of permitting a corporation to become so big and so entwined in the financial system that it cannot be allowed to fail.  “Too big to fail” sounds like it is a prescription for taking excessive risk — for looking at short-term, easy money.  While FDIC insures deposits, that’s not to say that the failure of a bank comes at no cost to the taxpayers.  The recent failure of Indy Mac cost the shareholders as well as the taxpayers.  The shareholder losses came as a result of Indy Mac ceasing to exist.  The taxpayers had to pay the administrative costs of disposing of the bad loans and foreclosed properties.

I don’t begrudge some people making more money than others.  But I wonder if anyone is worth 350 times the salary of the average American worker.  And I don’t begrudge bonuses, but shouldn’t there be some relationship between a bonus and performance?  Between a retention bonus and the recipient actually still working for the corporation?  I’m a big fan of stock options as a bonus, especially if there is a time lag between the time they’re awarded and the time they can be exercised (at the stock price at the time of the award).  That time lag ensures that employees will continue to perform; there isn’t much incentive to exercise the option if the stock value has declined.  I’m all for regulating to contain greed as greed (combined with the relaxation of regulation and oversight) was a major cause of the current situation.

Clearly we are part of a global economy; solutions need to to be developed in concert and cooperation with other nations.  And consumers need better protection from the rapacious ways of the economic Masters of the Universe.  These elements are also part of Geithner’s proposal.  There are still powerful forces who, despite the current situation, are disciples of laissez-faire economic theory.  They will fight any and all regulatory attempts.  And because Congress counts on them to fill their campaign coffers, Congress must be reminded that they represent the people, not just corporations.


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Perhaps I’m just impatient.  Perhaps Treasury needs to staff up first.   But rather than trying to figure out “legal” ways to restrict salaries and bonuses for the folks in companies getting public bailout funds, I’d much rather see Congress work on re-regulating the system.  Sure, it doesn’t fuel populist anger like taxing bonuses does, but it would be far more important in the long run.

Start with repealing Gramm-Leach-Bliley.  That was the charming piece of legislation that removed the “wall” between various kinds of financial institutions.  It allowed these entities to become to large to fail because they had tentacles into commercial banking, investment banking, hedge funds, and insurance.  And it allowed legal space for companies to push the risk of loans far and wide while raking in the (temporary) profits.  Thus the rise of credit default swaps, securitized mortgage loans, and all those instruments that are now so toxic.

President Obama is pushing to allow the government to seize not just banks but insurance companies (think AIG, or whatever they’re calling themselves these days), and investment banks (like Merrill Lynch, Lehman, Morgan Stanley and the others who’ve gone belly up in the melt-down).

I just caught a bit of Sec. Geithner’s testimony before Barney Franks’ committee, and he made a statement that bears repeating again and again.  The topic was the monies AIG paid to its counterparties — the investment and foreign banks that had purchased the credit default swaps AIG was selling.  The take away comment was that Treasury lacked the authority, even as the majority owner of AIG, to demand that the counterparties be made less than whole. The counterparties purchased CDSs as a hedge against mortgage backed securities — insurance in case these sliced-and-diced mortgages turned out to be worth far less than anticipated.

There is a direct line between Geithner’s statement, the need to repeal Gramm-Leach-Bliley, and the President’s proposal.  Gramm-Leach-Bliley dismantled the regulatory wall that stood between commercial banks (the entities who traditionally have written mortgages), the investment banks (the entities who created the mortgage backed securities), and the insurance companies who created the credit default swaps.  That wall had been erected as part of the regulatory framework created after the Great Depression to prevent another one.

A new or revised regulatory framework could mean that these hybrid companies would have to decide what they really want to be.  They would have to create separate companies for each part rather than simply combining them into one uber-institution, now deemed to big to fail because failure would create systemic risk.  There is danger in being too big to fail, and perhaps the best solution is to make sure that no business can get to that point.

As another part of the Depression Era regulatory framework, the FDIC was created to allow the government to seize a failing bank, pay depositors out of an insurance pool, and sell off the bank’s assets (its loans).  A similar framework that would facilitate the orderly resolution of a failed investment bank or insurance company does not exist.  That’s the direction the Obama Administration is heading — to create some sort of entity or entities that would serve the same function as the FDIC but for investment banks, hedge funds and insurance companies. FDIC has proven to be a successful model for making sure that depositors are protected and that assets can be sold off.  Clearly part of the current difficulty lies in the question of how to unwind the legacy assets so they can be sold off and removed from the institutions’ balance sheets.  In the process of a bank take-over, contracts with creditors and employees are subject to revision, thus preventing bonuses that serve to reward bad behavior.

AIG has rightfully been the target of a great deal of public anger in recent days.  But it’s important to understand just how AIG got itself into its financial mess, because its story is a powerful argument for repealing Gramm-Leach-Bliley and establishing the kind of regulatory framework that will allow the financial system to return to long-term health.  The LA Times has an article today that is worth reading.  Unfortunately, its online edition doesn’t include some of the most interesting information — what went wrong.  So, here it is:

In 2007, AIG was one of the world’s largest companies with $1 trillion in assets, $110 billion in reserves, 74 million customers, and 116,000 employees.  Here are highlights of what happened.

  • In 2001 it began selling credit default swaps — insurance protection against default on mostly mortgage-based securities.
  • Those securities initially were given AAA ratings, which allowed AIG to expand this activity without putting up huge collateral or creating giant reserves.
  • As homeowners began to default on mortgages in 2007, AIG began to incur heavy losses.
  • Those losses led to reduction of AIG’s credit rating in September 2008, forcing it to post billions in collateral.
  • With the credit crisis and the economy unraveling, AIG could not find financing or sell assets to cover its collateral.

Interestingly, but not surprisingly, the smaller community-based banks have generally fared well during the melt-down.  They chose not to participate in sub-prime lending practices, did their own underwriting, and kept the loans in house.  By assuming the risk themselves, rather than spreading it out among investors and then purchasing credit default swaps to hedge their bets, they were careful to lend only to credit-worthy borrowers.  In hind sight, it’s fairly easy to see how the house of cards was built — and why it collapsed.

Instead of responding to and fueling popular anger, it’s time for Congress to lower the temperature, do their homework, and work with the Administration to determine the best way to prevent another feeding frenzy wherein greed and the promise of a quick buck reign supreme.  Have we learned our lesson yet?  That remains to be seen.  Unfortunately, so long as the financial sector contributes so heavily to Congressional campaigns, we can expect that their influence in determining policy will remain strong.  We — the voters and taxpayers — must remain vigilant.

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Today it’s Vikram Pandit of Citibank’s turn, and he gets a “twofer.”  Mr. Pandit announced recently that Citibank has turned around and begun to show a profit.  And he talked proudly of how he was being responsible and taking a much lower salary of only $1 million.  Great, we thought, now he can start repaying the loans we taxpayers gave him.

But, no.  Wrong on both counts.  Seems he was fudging the facts on the salary — that he was earning something north of $5 million.  Those pesky bonuses, I suppose. Frankly, I don’t care what you call it — salary, bonus, deferred compensation, whatever — it’s all money going from the Citibank (and our) coffers into his personal one.

And today, like John Thain, our first award winner, Pandit is treating himself to a pricey renovation of his executive office suite — a renovation that makes Thain’s look like a bargain.  Citibank has taken out permits for the basic construction portion of the refurb –permits that indicate over $3 million just for things like moving and removing walls, plumbing, fire safety.  And that’s way before the really pricey stuff like rugs, furniture, and yes, trash cans.

I’m sure all those recently laid-off Citibank employees are just thrilled to know that Citibank is once again turning a profit.  I wonder how many of them are renovating their offices or their homes these days.  Mr. Pandit, I don’t begrudge you a spiffy new office — AFTER YOU’VE PAID ME BACK!  The construction industry could use the jobs, but if you have $10 million to spend on your office re-do, you certainly can afford to use some of Citibank’s recent profits to start repaying the American taxpayers.  And that money should be repaid before you even start thinking of new digs.

Do these guys not read the newspapers or watch TV?  Do they still not realize the degree of taxpayer rage at their arrogance? Is it time to grab the pitchforks and torches and man the barricades yet?  Vikram Pandit, you’ve been awarded the “Let them Eat Cake” award.

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For the purposes of argument, let’s accept current AIG CEO Liddy’s argument that the company is contractually bound to pay out the bonuses AND that their employees are the brightest bulbs in the pack — the only ones who can unwind the esoteric financial instruments that sent them into the financial toilet.  Yes, it’s a stretch, but stay with me for a minute.

If both those premises are true, put the bonus money into an escrow account, managed by some independent agent, payable when (and if) these folks have managed to right the AIG ship.  If they can do so, they will have proven that they are in fact deserving of reward.  If not, the company should be forced to sell off its remaining assets, the staff fired, and the escrow monies returned to the taxpayers.  At that point, let them sue — the former AIG will have no assets with which to pay them back, and these so-called experts will have been revealed as frauds, undeserving of bonuses.

Of course, both premises ring hollow.  The government was able to wring concessions from the UAW in exchange for federal loans — changes in a contract.  And loans (a form of contract) can be re-negotiated.  We’re told that the money the Fed and the Treasury (through TARP) gave to AIG is in fact a loan from the government.  So, why can’t concessions from non-union AIG employees be a part of the deal? The second premise — that these executives are the only ones capable of understanding the intricacies of AIG’s finanacing and that if the bonuses aren’t paid, they’ll leave — is also faulty.  Imagine trying to dance around your role in AIG’s failure on a resume or in a job interview!

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The latest award goes to Ken Lewis, CEO of Bank of America.  Despite taking billions in federal TARP funds, he is refusing to reveal what he knows about the $3.6 billion that went to Merrill Lynch senior staff (some 700 people) on the eve of his institution taking over the failing investment bank.  Not only did he choose not to talk, but he had the temerity to travel to New York via his $50 million corporate jet, then by luxury SUV to discussions with the New York Attorney General, where he again refused to talk.  Will he refuse, a la Karl Rove and others, to honor a subpoena?

What Mr. Lewis and other bailed out bankers fail to recognize is that they no longer work for themselves.  They work for us.  One wonders just why nationalizing certain failing banks is such a bad idea.  It is one way to force them to replace their management teams and return a sense of sanity and reality to their operations.  This is same Ken Lewis who, with a straight face and under oath, told a Congressional committee that they got it — that they understood that times were different, that they had to act differently now that they had accepted TARP funds.  Somehow stonewalling doesn’t square with “getting it.”

So, Ken Lewis, you are hereby awarded the Let Them Eat Cake Award.

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A commenter suggested that the funds allocated to the American Recovery and Reinvestment Act (aka the stimulus package) would be better spent by handing out checks to each person.  The final package comes to a bit less than $800billion or just under $2300 per person, not the $25,000 suggested in the comment.   The commenter also suggested that my preference for government administered stimulus funds indicated that I didn’t trust the wisdom of individuals to spend the money wisely.

The State of Alaska, flush with oil revenues last summer, provided funds of approximately $1200 per person to help their citizens pay for winter heating.  After some discussion, it was decided that rather than pay directly to the fuel providers, the funds should be transferred into people’s personal checking accounts.  The weekend the funds were in people’s hands, there was a run on wide screen TVs.  Few people actually spent the money as was intended — on winter heating costs.  How many of those people are now having to choose between food and fuel?  How many of those TVs were made here in the US?  Given that we Americans make relatively few things any longer, spending on “goodies” would likely create only retail and transportation jobs in the US while creating manufacturing jobs abroad.  What would be the long-term benefits to our country?

On the other hand, infrastructure projects create jobs in design, materials, transportation, and labor — the majority of them right here at home.  Information technology modernization projects provide jobs in installing, configuring and maintaining the systems, and in entering and verifying the data.

We’ve heard a lot of talk recently that the New Deal didn’t end the Depression — that World War II did.  I recognize that WWII was a necessary war to fight, but I cannot conceive of a larger government “make work” project.  Millions of people served in our active duty forces, paid by the government.  Millions more worked to build the planes, jeeps, tanks, guns, artillery pieces, and ammunition necessary to fight the war  — jobs that, while in the private sector, were paid for ultimately by the government, i.e., the American taxpayer.

People need to examine the changes in the unemployment rate beginning in 1932 with the introduction of the New Deal.  The rate dropped each and every year from 1932 to 1941 (the pre-war years) save the one year that FDR cut back on government spending.

We as a nation still benefit from many of the public works projects that came out of the New Deal — Hoover Dam, the Golden Gate Bridge are two that come to mind immediately.  A second massive, government-funded infrastructure project was our interstate highway system, begun during the Eisenhower administration.

Despite what conservatives want you to believe, tax cuts provide minimal stimulative power.  Infrastructure projects are far more stimulative, producing more jobs and thus income that can be re-circulated throughout the economy.

Finally, the commenter suggested that the bill should have contained defense spending.  The argument as to why is unclear, other than that defense spending is constitutionally mandated spending.  The current budget (FY2010) is crammed full of defense spending and the President has indicated that spending levels will remain high — if for no other reason than to repair and replace the materiel that has been consumed during our two current wars.  Certainly there are defense programs that could be trimmed or even eliminated, but the overall need for defense spending remains high.  Indeed, demands on our economy to provide the needed and promised care for our troops injured in Iraq and Afghanistan will continue to increase.

Then yesterday, a day after President Obama announced a plan to try to slow the number of forclosures in this country, a pundit went ballistic on the air, calling it a plan to bail out “losers.”  Given that the practices of mortgage brokers, lenders, hedge fund managers, and investment bankers are a significant cause of our current mess, I can only wonder if he would consider the TARP a case of bailing out losers as well.

The economic mess in which we find ourselves has several components — the near meltdown of the financial system, the housing crisis, and the crisis in consumer confidence that has led to a near halt in demand and the subsequent loss of jobs.  The economy cannot and will not recover if we fail to identify and address the problems in each of those components.  The TARP attempted to address the problems in the financial sector; the stimulus addressed the jobs component; and the housing plan addresses problems in the third leg of the economic stool.  It will take astronomical amounts of money to solve the problems.  But leaving it to the markets to find their level would likely find the United States reverting to a third world level economy.  None of us want that to occur.

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Last time I wrote that tax cuts are relatively ineffective in stimulating the economy.  That’s especially true for tax cuts targeted at the top rungs of the economic ladder.   Over the weekend, the Congressional Budget Office released the following chart showing the stimulative effect of various aspects of the proposed recovery package.

Stimulative effect compared

Stimulative effect compared

Direct purchase of goods and services by the federal government provides the biggest boost, closely followed by aid to the states spend both on infrastructure and on other items.  Yet these are the three areas where most of the proposed cuts lie.  So, one must ask what these centrists are thinking.

A clue may be found in this article from the Washington Post in which the Republican party, in which they hope to begin their re-birth by opposing the package.  So, once again I ask, “Is their opposition based on principle as they claim or on politics?”  It is increasingly looking like their goal is political advantage.  Damn the facts, full speed ahead.  Most economists, both conservative and liberal, argue that the economy needs a big shot in the arm.  There isn’t much news out there to indicate otherwise.

Meanwhile, unemployment continues to increase as is shown in this interactive chart.  What’s particularly striking about this chart is the steady growth over time and the uneven impact of job losses, both by state and by economic sector. And the January numbers — those 600,000 additional jobs lost aren’t shown in this iteration.  Interestingly, many of the states with rates above the national average are represented by people who voted against the package — voting against job creation.  And many economists are more concerned that the package will end up being too small, not too large.

Nearly 1/2 of the 11.6 million unemployed Americans are not receiving benefits.  State unemployment funds in California, for example, are exhausted.  Additionally, the people who have been trying to make do with multiple part-time jobs or who are independent contractors are ineligible for unemployment benefits if they are laid off.  Using independent contractors rather than regular employees is an attractive option for employers because they can push the full payroll tax burden back onto the employee.  And some industries use independent contractors almost exclusively.  But more insidious is the reality that it is taking longer than 26 weeks (6 months) for people to find new employment in this economy.  Benefits run out after 6 months.  And benefits are financed with some of the federal tax dollars that come back to the states.  But the money doesn’t come back on a dollar for dollar basis.

The most populous states — the ones who tend to be better educated and more progressive in their thinking and thus in their choice of representatives in Congress — typically send more money to Washington in the form of taxes than they receive back in the form of block grants and other federal monies.  The following chart from the U.S. Department of Commerce is instructive.  But like many statistics, it can be somewhat misleading unless one knows how that money is spent.  For example, New Mexico gets double the dollars back that it sends to Washington.  But New Mexico is also home to several Air Force Bases, two federally-owned national research laboratories, and a number of universities that receive some federal funding for research and to defray some of their other expenses.

State Ranking of Per Capita Spending, Per-Capita Tax
Burden and Return on the Federal Tax Dollar: Fiscal 2005

       Ranking by Per Capita        Ranking by Per Capita        Ranking of Return
Rank   Total Spending               Tax Burden                   on Tax Dollar

1      Alaska             13,788    Connecticut        11,563    Mississippi    2.02
2      Virginia           12,583    New Jersey          9,947    New Mexico     2.00
3      Maryland           11,972    Massachusetts       9,800    Louisiana      1.85
4      New Mexico         10,752    Maryland            8,824    Alaska         1.83
5      North Dakota       10,391    New York            8,758    West Virginia  1.75
6      Hawaii             10,018    Nevada              8,359    North Dakota   1.65
7      South Dakota        9,590    Wyoming             8,310    Alabama        1.63
8      Wyoming             9,440    New Hampshire       8,172    Virginia       1.51
9      Alabama             9,265    California          8,047    Kentucky       1.51
10     Mississippi         9,027    Virginia            7,963    South Dakota   1.48

11     West Virginia       8,909    Minnesota           7,935    Montana        1.43
12     Connecticut         8,827    Washington          7,923    Hawaii         1.43
13     Louisiana           8,815    Delaware            7,878    Maine          1.41
14     Massachusetts       8,684    Illinois            7,844    Arkansas       1.40
15     Maine               8,654    Colorado            7,677    Oklahoma       1.35
16     Montana             8,350    Florida             7,620    South Carolina 1.35
17     Missouri            8,340    Rhode Island        7,470    Missouri       1.32
18     Kentucky            8,308    Alaska              7,215    Maryland       1.30
19     Tennessee           8,062    Pennsylvania        7,111    Tennessee      1.29
20     Pennsylvania        8,046    Hawaii              6,721    Idaho          1.19

21     Rhode Island        7,896    Wisconsin           6,671    Arizona        1.19
22     Oklahoma            7,816    Vermont             6,592    Kansas         1.13
23     Florida             7,586    Michigan            6,562    Iowa           1.09
24     South Carolina      7,531    Oregon              6,497    Vermont        1.09
25     New York            7,521    Texas               6,432    Wyoming        1.09
26     Arizona             7,500    Nebraska            6,420    Nebraska       1.09
27     Vermont             7,495    Kansas              6,359    Pennsylvania   1.08
28     Kansas              7,474    South Dakota        6,205    Utah           1.08
29     Washington          7,389    Georgia             6,143    North Carolina 1.08
30     Arkansas            7,354    Ohio                6,135    Indiana        1.07

31     Nebraska            7,289    Indiana             6,086    Ohio           1.06
32     Iowa                6,884    Missouri            6,077    Georgia        1.03
33     North Carolina      6,817    North Carolina      6,054    Rhode Island   1.01
34     Ohio                6,796    Arizona             6,046    Texas          0.97
35     New Jersey          6,771    Iowa                6,033    Florida        0.95
36     Indiana             6,768    North Dakota        6,021    Michigan       0.94
37     Idaho               6,731    Tennessee           5,989    Oregon         0.93
38     California          6,725    Maine               5,890    Washington     0.89
39     Colorado            6,670    Montana             5,586    Wisconsin      0.88
40     Georgia             6,571    Oklahoma            5,535    Massachusetts  0.85

41     Delaware            6,537    Alabama             5,436    Colorado       0.83
42     Texas               6,509    Idaho               5,420    New York       0.82
43     Michigan            6,410    South Carolina      5,337    California     0.80
44     New Hampshire       6,393    Kentucky            5,275    Delaware       0.80
45     Illinois            6,351    Utah                5,243    Illinois       0.78
46     Oregon              6,279    New Mexico          5,162    New Hampshire  0.75
47     Wisconsin           6,091    Arkansas            5,024    Minnesota      0.73
48     Minnesota           6,075    West Virginia       4,882    Connecticut    0.73
49     Utah                5,917    Louisiana           4,574    Nevada         0.67
50     Nevada              5,849    Mississippi         4,287    New Jersey     0.65

SOURCES: Northeast-Midwest Institute staff calculations based on U.S. Department of Commerce, Bureau of the Census, annual Consolidated Federal Funds Report, and The Tax Foundation, annual Special Report: Federal Tax Burdens and Expenditures by State.

All of this data points again to the idea that opposition to the package is based more on politics than on principle.  The opponents to the package have gotten significantly more air time than the proponents, thus magnifying their voice.  And they have focused on a minuscule portion of the total package in their objections — less than 1% by most objective analysis.

UDPATE:  In case you’ve been swayed by the endless prattle coming from the pundits and the Republican members of Congress, take a loot at the latest Gallup poll numbers as reported by ABC.  So far, the President is carrying the day, and disapproval numbers for Congress, especially for Republicans, is abysmal.  You’d think they’d pay attention if they think being “insurgents” as one of the House Republicans defined their approach (going so far as to compare them to the Taliban of all people!) will be the start of a comeback.  The Taliban are revitalizing, too, so who can say…

President Obama has said that the country urgently needs Congress to pass the recovery package quickly.  His advisors say that there is about 10% of the total that is in contention and that the conference discussions will be lively to be sure.  In case there is any doubt of the degree of urgency, this chart from the Bureau of Labor Statistics should prove instructive.  Job losses in recent recessions

This recession is considerably deeper than either of the two preceeding ones.  There is no indication that we have reached the bottom. Indeed, there is no indication of how far we may be from the bottom.  It’s time to act.  This bill isn’t perfect, but given that there is agreement on 90%, the Congress really needs to come together and provide some much needed leadership.  It’s no surprise that the public is tired of politics as usual.

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