Article 43

 

Monday, November 24, 2008

The $70-Per-Hour Lie

By brownsox
Daily Kos
November 21, 2008

HAVE YOU HEARD THE ONE ABOUT the UNION autoworker making more than $70 PER HOUR, forcing American auto companies into bankruptcy?

There are two very small PROBLEMS with that. First, there’s SOMETHING WRONG with workers making a good living? As wrong for a blue-collar worker to make $70 as for a CEO to make $11,000?

Second, IT’S NOT TRUE. Average wages for Big Three workers are around $28 per hour.

But then what’s the source of that $70 hourly figure? It didn’t come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits--namely, health insurance and pensions--and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages--again, $24 per hour--and you get the $70 figure. Voila.

Except ... notice something weird about this calculation? It’s not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that--probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees--in other words, the cost of benefits for other people.

Rather slick and cheeky of them, it must be said, to craft this particular line of bull.

Needless to say, if we had universal healthcare, enemies of unions wouldn’t be able to tell this particular lie, and American auto companies would be doing a lot better financially. The plight of this industry should shore up our resolve for healthcare reform. And in the interim, as we watch one industry after another ask for government assistance, we ought not to place the blame for a single industry’s problems on the backs of its unionized workers.

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Posted by Elvis on 11/24/08 •
Section General Reading
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Another Bank Bailed Out

The people who take a shower before they go to work get bailed out. The people who must take a shower after work get thrown out.
- Leo Gerard, President Steelworkers Union

Citi dodges bullet

Government will guarantee losses on more than $300 billion in troubled assets and make a fresh $20 billion injection.

By David Ellis
CNN
November 24, 2008

The U.S. government on Sunday announced a massive rescue package for Citigroup - the LATEST MOVE to steady the banking giant, whose shares have plunged in the past week.

Citigroup shares rose 56% in premarket trading Monday.

THE PLAN has two key features:

First, the U.S. Treasury and the Federal Deposit Insurance Corporation (FDIC) will backstop some losses against more than $300 billion in troubled assets.

Second, the Treasury will make a fresh $20 billion investment in the bank. The government has already injected $25 billion into Citigroup as part of the $700 billion bailout passed by Congress in October.

In return for the latest intervention, the government will receive an additional batch of preferred shares - $20 billion for its direct investment and $7 billion as compensation for the loan guarantees. Citigroup will pay an 8% dividend rate on those shares.

In addition, the government will get warrants, or the right to purchase $2.7 billion worth Citigroup shares in the future.

The government will impose restrictions as well. Citigroup will be prohibited from paying out a dividend of more than a penny per share for the next three years and will face limits on executive compensation.

Plus, Citigroup will be expected to adjust mortgages for troubled borrowers, using procedures similar to those the FDIC implemented at IndyMac, which it took over last summer.

“With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy,” Treasury, Federal Reserve and the FDIC said in a joint statement.

Under the terms of the Citigroup rescue package, the bank would be on the hook for the first $29 billion in losses on the covered assets, which includes mostly loans backed by residential and commercial mortgages. It would cover 10% of losses above that amount, with the government shouldering the rest.

Despite the massive rescue effort, regulators did not push for a management change at Citigroup. In recent days, there had been speculation that Citigroup CEO Vikram Pandit could step down. There had also been talk that the company was considering replacing Chairman Sir Win Bischoff, although the company denied such reports.

Citigroup has been one of the hardest hit financial firms since the mortgage market first started to unravel in the fall of 2007. Over the past four quarters, the company has recorded close to $21 billion in losses.

Investors seemed encouraged by news of the Sunday night rescue. Major European markets jumped at the open, with Citi shares climbing 35% in Frankfurt. U.S. futures were pointing to a higher open Monday.
A scary week

Federal Reserve Chairman Ben Bernanke and Timothy Geithner, president of the New York Fed, were both involved in the weekend talks over Citigroup’s fate, according to government officials. Geithner is expected to be nominated to be Treasury Secretary by President-elect Barack Obama.

There had been concerns that letting another major financial institution fail would have disastrous consequences for both the U.S. economy as well as the global financial system. The bank had more than $2 trillion in assets as of the end of the third quarter and has operations in more than 100 countries.

Last week, fears about Citigroup’s fate rattled equity markets around the globe and sent shares of the 196-year-old firm plummeting to levels not seen in over a decade.

Citigroup shares lost close to two-thirds of their value for the week, even as the company announced plans to layoff more than 50,000 workers and as its largest individual shareholder upped his stake.

By the close of trading on Friday, Citigroup (C, Fortune 500) shares had dipped below $4 a share, and were down 87% for the year.

The most recent slide in Citigroup stock comes on the heels of news earlier this month that the Treasury Department was abandoning its initial rescue plan to buy troubled assets from banks - Citigroup had been seen as a major beneficiary of that strategy.

Instead, as part of the $700 billion BAILOUT PACKAGE that was signed into law in early October, Treasury has focused on making direct investments in banks. In exchange for equity stakes, the agency has injected $25 billion into Citigroup and an additional $100 billion into eight other major U.S. financial institutions.

Despite the recent events, many industry experts had stressed that Citigroup is relatively healthy. Two veteran banking analysts - Mike Mayo of Deutsche Bank and Ladenburg Thalman’s Richard Bove - both advised clients last week that Citigroup could survive substantial loan losses.

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Posted by Elvis on 11/24/08 •
Section Dying America
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Marvel At The Beast - Part 4

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Little children, it is the last time: and as ye have heard that antichrist shall come, even now are there many antichrists; whereby we know that it is the last time.
- I John 2:18

You’re Scaring Me, Obama: Let the Bush Years Die

By Heather Wokusch
Common Dreams
November 21, 2008

TO BE HONEST, Obama, you lost me when you voted for the PATRIOT Act reauthorization in 2006. You lost me again when you voted for the Foreign Intelligence Surveillance Act (FISA) amendment in 2008. And you lost me every single time you voted for yet more war funding.

Don’t even get me started on your vote for the $700 billion Wall Street bailout.

I cast a ballot for you in November, but I just can’t share in this moment of collective euphoria over your election.

So, if your transition team really wants feedback on WHERE PRESIDENT-ELECT OBAMA SHOULD LEAD THIS COUNTRY, here’s a Top Five list:

1. Dump the Bush Doctrine and don’t start more wars

You’ve made it clear that the US has to “take out Osama bin Laden and his lieutenants if we have them in our sights” and you’ve argued for “more resources and more troops to finish the fight against the terrorists who actually attacked us on 9/11.”

What exactly does that mean?

Take troops out of Iraq and shove them into Afghanistan? Further destabilize Pakistan?

The whole idea of preemptive war (a.k.a. the Bush Doctrine) has no place in a civilized society and must be laid to rest, along with those sacrificed in Bush’s military adventurism these past eight years.

Yet your approach to preemptive war, Mr. Obama, is nuanced at best.

During the January 2008 Democratic presidential debate, you said that if the US had “actionable intelligence” and Pakistan didn’t “take on Al Qaida in their territory,” then “I would strike.” You added, “ And that’s the flaw of the Bush doctrine. It wasn’t that he went after those who attacked America. It was that he went after those who didn’t.”

No, the flaw of the Bush Doctrine is that it’s just plain wrong. We’ve learned that the hard way.

2. Ditch the warmongers

What’s with all of the hawks in your new administration?

You presented yourself as a peace candidate and then chose Joe Biden as your VP. Yes, he brought in the white male vote, but he also backed the invasions and occupations of Afghanistan and Iraq.

Just last month Biden WARNED that if you were elected, there would be “an international crisis, a generated crisis, to test the mettle of this guy.” He said that you would make some “incredibly tough decisions” that could alienate the Democratic base, because IF DECISIONS ARE POPULAR, THEY’RE PROBABLY NOT SOUND.

In other words, a popular decision, one that the majority of the people wants, is probably not a good decision. Democracy to Biden

And then there’s Robert Gates, widely rumored to be staying on as your Defense Secretary. Questions about Gates’ role in Iran-Contra, not to mention his skewing of intelligence about Russia, still linger.

But especially disturbing is his recent push for beefing up the US nuclear arsenal: “As long as other nations have or seek nuclear weapons Ŗ and can potentially threaten us, our allies and friends then we must have a deterrent capacity that makes it clear that challenging the United States in the nuclear arena, or with weapons of mass destruction, could result in an overwhelming, catastrophic response.”

Let’s get this straight: if other nations are even imagined to “seek” nuclear weapons, that “could result in an overwhelming, catastrophic response” from the US.

Obama, you’ve often insisted on taking “no options off the table” in dealing with Iran. How does Gates’ proposal for the preemptive use of nuclear weapons factor in there?

While we’re on the topic of warmongers in your midstօ Rahm Emanuel as Chief of Staff? Yet another hawk, hell-bent on Iran and enamored with nuclear weapons.

And now we’ve got Clinton as Secretary of State.

Why is it that none of the 23 senators and 133 House Reps who voted against the war in Iraq are even on a short-list for these critical posts?

3. Close Guantanamo and the whole system of secret prisons

Shutting down Gitmo is said to be a priority for your new administration. Terrific.

But what about Bagram? What about the other CIA “black site” secret prisons set up in Afghanistan, Thailand, Eastern Europe and elsewhere? What about the CIA torture flights? Will those end too?

Closing Gitmo also raises questions over how “high value” defendants will be handled. Your administration is reportedly considering setting up an alternative court system to deal with sensitive cases. But what safeguards will be in place to be sure that this new system won’t degenerate into kangaroo courts, like Bush’s military commissions?

It’s a disturbing signal that you’ve appointed John Brennan, who has supported extraordinary rendition and warrantless wiretapping, to help review intelligence agencies for your administration. As former CIA and State Department analyst Mel Goodman noted, Brennan “sat there at [former CIA Director George] Tenet’s knee when they passed judgment on torture and abuse, on extraordinary renditions, on black sites, on secret prisons. He was part of all of that decision making.”

And this is who will help lead us out of this mess?

You’ve criticized the use of torture, yet reportedly will not bring criminal charges against those who authorized or conducted torture during the Bush years. Your administration doesn’t see it as politically expedient, and Bush might give “preemptive” pardons anyway.

But can we really end this dark chapter in our nation’s history without even an investigation? A Truth Commission, perhaps? Providing blanket immunity to all low-level and senior government officials won’t prevent possible war crimes from happening again. Quite the opposite.

4. Expose Bush & Co., and ditch the national surveillance state

Speaking of war crimes, how about Bush, Cheney and the rest? You’ll soon be given access to Bush-era secret orders and opinions authorizing everything from surveillance to detention. You’ll no doubt rescind many, to great fanfare, but what about sharing this evidence of Bush-year excesses with the public?

Yes, Bush could file a lawsuit and invoke executive privilege, but it’s worth the fight. The only other option is shielding Bush & Co., similar to how you will reportedly shield those government officials involved in torture. But the public deserves to know. And if Bush administration officials violated the law, they should be prosecuted.

Now, back to your vote for both the PATRIOT Act reauthorization in 2006 and the Foreign Intelligence Surveillance Act amendment in 2008. These and other rollbacks in domestic civil liberties under Bush are inexcusable and must be addressed. We’ll be waiting for you to do that.

5. Choose Main Street (not Wall Street)

Just this month you promised Americans that they can “turn the page on policies that have put the greed and irresponsibility of Wall Street before the hard work and sacrifice of folks on Main Street.”

Yet, as Bloomberg notes, “almost half the people” on your Transition Economic Advisory Board “have held fiduciary positions at companies that, to one degree or another, either fried their financial statements, helped send the world into an economic tailspin, or both.”

This includes, for example, Anne Mulcahy and Richard Parsons, both of whom were Fannie Mae directors when the company fudged accounting rules. Ditto for another of your team members, William Daley.

Mulcahy and Parsons additionally held executive posts when their companies (Xerox Corp. and Time Warner Inc., respectively) got busted for accounting fraud by the Securities and Exchange Commission.

Also on your team is Richard Rubin, who as Bloomberg notes, was “chairman of Citigroup Inc.’s executive committee when the bank pushed bogus analyst research, helped Enron Corp. cook its books, and got caught baking its own. He was a director from 2000 to 2006 at Ford Motor Co., which also committed accounting fouls and now is begging Uncle Sam for Citigroup-style bailout cash.”

The list of questionable appointees to your Transitional Economic Advisory Board goes on and on, begging the question: Is this really the best you could come up with? How about Joseph Stiglitz, Sheila Bair, Nouriel Roubini or James K. Galbraith, for starters? Someone who represents labor?

Meanwhile, we’re stuck with this nasty bailout bill ֖ which you voted for.

Others, such as Sen. Russ Feingold (D-WI), realized the bill’s problems and voted against it. Feingold said that the Wall Street bailout legislation, “fails to reform the flawed regulatory structure that permitted this crisis to arise in the first place. And it doesn’t do enough to address the root cause of the credit market collapse, namely the housing crisis. Taxpayers deserve a plan that puts their concerns ahead of those who got us into this mess.”

Feingold was right.

In short, Mr. President-elect, you promised “Change we can believe in,” but across the board it’s looking a lot more like “Business as usual.”

SOURCE

Posted by Elvis on 11/24/08 •
Section Revelations
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The Investment Deficit In America

America is falling apart. Falling apart, and falling behind.

Previous generations of Americans built interstate highways and transcontinental railroads. Now we sit in traffic.

Americans from an earlier era pioneered universal primary education and chartered great universities on public land. They enacted the G.I. bill to give the greatest generation the access to college that helped build our modern middle class. Nowadays American students toil in overcrowded classrooms with leaky roofs, while the cost of college soars out of reach.

America grew up investing in its land and its people. Historically, we directed roughly 8 percent of our gross domestic product to long-range investments, and the investment paid off. Now we are down below 4 percent. Our post World War II infrastructure is starting to decay, and we arent replacing it. We are lamenting the loss of jobs rather than hiring people to renew and rebuild.

Other countries are racing past. China spends 9 percent of its GDP on infrastructure investment and opens a new subway system every year.

From physical infrastructure like roads and bridges to human capital from kindergarten to college, this report comprehensively examines our investment deficit. It documents yesterdayҒs achievements, todays problems and tomorrow’s solutions.

As THIS REPORT is released, Americas economy is in a deep downturn, which is now spreading across the globe. A major recovery program is essential to lift this economy from what is likely to be the worst recession since the Great Depression. Direct public investmentҗin new energy and conservation, in modernizing our infrastructure, in education and training, and research and developmentshould be the centerpiece of any recovery plan. That is not only necessary to lift the economy in the short run; it is a vital down payment on the sustained public investment that we need to sustain a competitive and decent society in a global
economy.

The needs listed in THIS REPORT provide a guidepost for both recovery and for long-term, sustainable growth.

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Posted by Elvis on 11/24/08 •
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