Allison Kilkenny: Unreported

Ukraine On The Brink

Posted in Capitalism, Economy by allisonkilkenny on March 2, 2009

NYT

Dozens waited outside the Rodovid Bank in Kiev on Friday to take money out of their accounts. The bank is close to failing. (Joseph Sywenkyj, NYT)

Dozens waited outside the Rodovid Bank in Kiev on Friday to take money out of their accounts. The bank is close to failing. (Joseph Sywenkyj, NYT)

KIEV, Ukraine — Steel and chemical factories, once the muscle of Ukraine’s economy, are dismissing thousands of workers. Cities have had days without heat or water because they cannot pay their bills, and Kiev’s subway service is being threatened. Lines are sprouting at banks, the currency is wilting and even a government default seems possible.

Ukraine, once considered a worldwide symbol of an emerging, free-market democracy that had cast off authoritarianism, is teetering. And its predicament poses a real threat for other European economies and former Soviet republics.

The sudden, violent protests that have erupted elsewhere in Eastern Europe seem imminent here now, too. Across Kiev last week, people spoke of rising anger about the crisis and resentment toward a government that they said was more preoccupied with squabbling than with rallying the country.

The sign held by Vasily Kirilyuk, an unemployed plumber camped out with other antigovernment demonstrators here in the past week, summed up the pervasive frustration: “Get rid of them all,” it said.

Mr. Kirilyuk did not hesitate to take that further. “There will be a revolt,” he said. “And people will come because they are just fed up.”

Mr. Kirilyuk, 29, was standing in the same central square where throngs in 2004 carried out the Orange Revolution, a seminal event that brought to power a pro-Western government in Ukraine. He said he was a fervent supporter then of the protesters, but now he and a few dozen others who have set up tents here are demanding that the heroes of that revolution step down.

It is not hard to understand why world leaders are increasingly worried about the discontent and the financial crisis in Ukraine, which has 46 million people and a highly strategic location. A small country like Latvia or Iceland is one thing, but a collapse in Ukraine could wreck what little investor confidence is left in Eastern Europe, whose formerly robust economies are being badly strained.

It could also cause neighboring Russia, which has close ethnic and linguistic ties to eastern and southern Ukraine, to try to inject itself into the country’s affairs. What is more, the Kremlin would be able to hold up Ukraine as an example of what happens when former Soviet republics follow a Western model of free-market democracy.

Ukraine is a linchpin for stability in Europe,” said Olexiy Haran, a professor of comparative politics at Kiev Mohyla University. “It is a key player between the expanding European Union and Russia. To use an alarmist scenario, you could imagine a situation in Ukraine that Russia tried to exploit in order to dominate Ukraine. That would make for a very explosive situation on the border of the European Union.”

That Ukraine can cause problems for Europe was highlighted in January when Ukraine engaged in a dispute with Russia over how much it would pay Russia for natural gas, as well as over gas transport to the rest of Europe. The Kremlin shut off the gas for several days, and some European countries went without heat. The Kremlin also shut off gas to Ukraine in 2006 in a pricing dispute.

While Ukraine’s economy is dependent on exports of steel and chemicals, which have plummeted, the crisis has cut deeply because people are disillusioned with the government.

President Viktor A. Yushchenko, a leader of the Orange Revolution, who garnered attention around the world in 2004 when his face was scarred in a poisoning episode, is so widely scorned that a recent poll found that 57 percent of people wanted him to resign.

His rivals have also lost popularity, as the public has become exasperated by years of political bickering. In February, the International Monetary Fund refused to release the next installment of a $16.4 billion rescue loan to Ukraine because the government would not adhere to an earlier agreement to pare its budget.

Around the same time, Ukraine’s finance minister resigned, saying that the job had been “hostage to politics.”

On Friday, the monetary fund projected that Ukraine’s economy would shrink by 6 percent this year, and said that it was continuing to work with the government to find a way to disburse the rest of the rescue loan.

A presidential election is coming, probably to be held next January, and this prospect is making politicians, especially Prime Minister Yulia V. Tymoshenko, reluctant to adopt an austerity program that might alienate voters.

Mr. Yushchenko and Ms. Tymoshenko were pro-Western allies during the Orange Revolution, but have bitterly feuded since then, and he fired her once. A third rival, Viktor F. Yanukovich, a former prime minister who heads an opposition party that favors closer ties with Russia, also wants to be president.

On Friday, Mr. Yushchenko and Ms. Tymoshenko held a public meeting in an effort to demonstrate that they were working together. Mr. Yushchenko said he wanted “to show the readiness of all sides to take political responsibility for decisions which today are not easy.”

Even so, the two did not announce further anticrisis measures.

All over Kiev have been signs that tensions are building.

On the city’s outskirts, more than 200 tractor-trailer rigs were parked Thursday, their drivers threatening to block roads if the government did not help them with their debts, which they said were caused in part by the drop in the value of Ukraine’s currency, the hryvnia.

The truckers dispersed Friday, only after the government said it would try to address their demands, but they said they would be back soon if they were ignored.

“The government is to blame for all this,” said a trucker, Viktor V. Zarichnyuk, 26, who had been at the protest for 12 days. “We want the government and the national bank to agree that the money allocated by the International Monetary Fund, at least part of it, should go to regular people.”

At a branch of the Rodovid Bank across town, a tense crowd gathered Friday morning. The bank, close to failing, was allowing withdrawals of only $35 a day. And so people, some of them pensioners fearful for their life savings, have been trooping each day, ever more aggravated, to try to get what they can.

“Every day we come here — it’s insulting — in the cold and line up,” said Alevtina A. Antonyuk, 58, an engineer. “They are nothing at this bank but a bunch of thieves.”

Who is to blame, she was asked. Before she could answer, Dmitri I. Havrilkiv, 78, a retired crane operator, interrupted.

“The government has to be replaced,” he shouted. “They just can’t handle it!”

Damning Bloomberg Article Reveals Geithner As Incompetent

Posted in Barack Obama, deregulation, Economy, politics by allisonkilkenny on March 1, 2009

Yalman Onaran and Michael McKee, Bloomberg News

timothy_geithner_reutersIt was 2004 and Tim Geithner, president of the Federal Reserve Bank of New York, had a message for the Federal Open Market Committee in Washington. He told his 18 colleagues gathered around the long mahogany table that a clearinghouse was needed to monitor risks in the burgeoning $5 trillion market for credit-default swaps — the over-the-counter derivatives that would later spin out of control and help take down Wall Street.

In a move that may have foreshadowed his role as President Barack Obama’s Treasury secretary, Geithner over the next two years nudged financial firms to voluntarily clear a backlog of swap trades. They stopped short of creating a clearinghouse to bring more transparency to the market.

“Geithner was making noise on reining in derivatives, but he didn’t push hard enough,” says Jane D’Arista, a former economist at the Congressional Budget Office in Washington and a longtime Fed observer. “Maybe he’ll be more forceful now that he’s in a position with real power. But I’m not so sure.”

From his years as a Dartmouth College student and mid-level Treasury official through his stint at the New York Fed, Geithner, 47, has thrived as a backroom negotiator and conciliator. Now, as he struggles to rescue Wall Street from a crisis that happened on his regulatory watch, investors and economists question whether the 75th Treasury secretary can transform himself into a bold leader equal to the challenges ahead.

Wall Street executives have cheered Geithner’s nomination.

Brief Honeymoon

“Treasury Secretary Geithner possesses the intelligence and experience needed to partner with President Obama and his economic team to lead us to a recovery,” says Robert Wolf, head of UBS AG’s Americas unit based in Stamford, Connecticut.

The rookie secretary has already learned that the honeymoon won’t last long. After Geithner presented a $2.5 trillion financial rescue plan on Feb. 10, the Dow Jones Industrials tumbled 4.6 percent because investors found it bereft of details. Geithner also gave no indication that he would act quickly to dismantle the weakest of the banks, a move that Joseph Mason, a former bank regulator who teaches finance at Louisiana State University, says he should take now.

Japan prolonged its credit crunch and recession for almost a decade before it finally nationalized two of its biggest banks, the Long-Term Credit Bank of Japan and Nippon Credit Bank, in 1998.

“The key to all our problems is the zombie banks,” Mason says. “We’re giving them money, which is not going to solve anything. We’re repeating the mistakes of Japan, which wasted a decade by not moving decisively against its zombie banks.”

Henry Morgenthau

No Treasury secretary since Henry Morgenthau, who served from 1934 to ‘45 under President Franklin D. Roosevelt, has faced so many crises at once. After receiving $800 billion in loans, guarantees and capital injections since October, the financial industry is still hunkered down, unwilling or unable to put the wind back into the sails of capitalism. Geithner played a role in shaping the $787 billion stimulus plan, and now he and Lawrence Summers, head of the National Economic Council, must recommend to President Obama whether to give General Motors Corp. and Chrysler LLC an additional $14 billion in loans on top of the $17.4 billion Bush administration bailout or force them into bankruptcy. At the White House, the new Treasury secretary may have to compete for the president’s attention with Summers, his former mentor, and Paul Volcker, who has been clamoring for more power as chairman of the Economic Recovery Advisory Board.

Methodical Style

Geithner’s strengths — his methodical style and bureaucratic savvy — were honed over 21 years in government, as he dealt with crises from Asia to New York.

“He really understands process and decision making and how to advance an agenda,” says Michael Froman, who was former Treasury Secretary Robert Rubin’s chief of staff. “Some people are just better at it than others, not just having the big idea but breaking it down into the several dozen steps that need to make it work. That’s Tim.”

The Treasury secretary’s experience at the New York Fed from 2003 to ‘08 gave him an inside view of Wall Street that will help him choose the best remedies for today’s crisis, says Alex Pollock, resident fellow at the American Enterprise Institute in Washington and a former president of the Chicago Federal Home Loan Bank. “He’s very well qualified,” Pollock says.

‘He’s Not Change’

Keep reading…

(more…)

The Ecstasy and the Agony

Posted in Barack Obama, corporations, Economy, politics by allisonkilkenny on March 1, 2009

Frank Rich, NYT

BARACK OBAMA must savor the moment while he can. It may never get better than this.#mce_temp_url#

As he stood before Congress on Tuesday night, the new president was armed with new job approval percentages in the 60s. After his speech, the numbers hit the stratosphere: CBS News found that support for his economic plans spiked from 63 percent to 80. Had more viewers hung on for the Republican response from Bobby Jindal, the unintentionally farcical governor of Louisiana, Obama might have aced a near-perfect score.

(Illustration by Barry Blitt)

(Illustration by Barry Blitt)

His address was riveting because it delivered on the vision he had promised a battered populace during the campaign: Government must step in boldly when free markets run amok and when national crises fester unaddressed for decades. For all the echoes of F.D.R.’s first fireside chat, he also evoked his own memorably adult speech on race. Once again he walked us through a lucid step-by-step mini-lecture on “how we arrived” at an impasse that’s threatening America’s ability to move forward.

Obama’s race speech may have saved his campaign. His first Congressional address won’t rescue the economy. But it brings him to a significant early crossroads in his presidency — one full of perils as well as great opportunities. To get the full political picture, look beyond Obama’s popularity in last week’s polls to the two groups of Americans whose approval numbers are in the toilet. There is good news for Obama in these findings, but there’s also a stark indication of the unchecked populist rage that could still overrun his ambitious plans.

The first group in national disfavor is the G.O.P. In the latest New York Times/CBS News survey, 63 percent said that Congressional Republicans opposed the stimulus package mostly for political reasons; only 17 percent felt that the Republicans should stick with their own policies rather than cooperate with Obama and the Democrats. The second group of national villains is corporate recipients of taxpayer money: only 39 percent approve of a further bailout for banks, and only 22 percent want more money going to Detroit’s Big Three.

The good news for Obama is that he needn’t worry about the Republicans. They’re committing suicide. The morning-after conservative rationalization of Jindal’s flop was that his adenoidal delivery, not his words, did him in, and that media coaching could banish his resemblance to Kenneth the Page of “30 Rock.” That’s denial. For Jindal no less than Obama, form followed content.

The Louisiana governor, alternately smug and jejune, articulated precisely the ideology — those G.O.P. “policies” in the Times/CBS poll — that Americans reject: the conviction that government is useless and has no role in an emergency. Given that the most mismanaged federal operation in modern memory was inflicted by a Republican White House on Jindal’s own state, you’d think he’d change the subject altogether.

But like all zealots, Jindal is oblivious to how nonzealots see him. Pleading “principle,” he has actually turned down some $100 million in stimulus money for Louisiana. And, as he proudly explained on “Meet the Press” last weekend, he can’t wait to be judged on “the results” of his heroic frugality.

Good luck with that. He’s rejecting aid for a state that ranks fourth in children living below the poverty line and 46th in high school graduation rates, while struggling with a projected budget shortfall of more than $1.7 billion.

If you’re baffled why the G.O.P. would thrust Jindal into prime time, the answer is desperation. Eager to update its image without changing its antediluvian (or antebellum) substance, the party is trying to lock down its white country-club blowhards. The only other nonwhite face on tap, alas, is the unguided missile Michael Steele, its new national chairman. Steele has of late been busy promising to revive his party with an “off-the-hook” hip-hop P.R. campaign, presumably with the perennially tan House leader John Boehner leading the posse.

At least the G.O.P.’s newfound racial sensitivity saved it from choosing the white Southern governor often bracketed with Jindal as a rising “star,” Mark Sanford of South Carolina. That would have been an even bigger fiasco, for Sanford is from the same state as Ty’Sheoma Bethea, the junior high school student who sat in Michelle Obama’s box on Tuesday night and whose impassioned letter to Congresswas quoted by the president.

In her plea, the teenager begged for aid to her substandard rural school. Without basic tools, she poignantly wrote, she and her peers cannot “prove to the world” that they too might succeed at becoming “lawyers, doctors, congressmen like yourself and one day president.”

Her school is in Dillon, where the Federal Reserve chairman, Ben Bernanke, grew up. The school’s auditorium, now condemned, was the site of Bernanke’s high school graduation. Dillon is now so destitute that Bernanke’s middle-class childhood home was just auctioned off in a foreclosure sale. Unemployment is at 14.2 percent.

Governor Sanford’s response to such hardship — his state over all has the nation’s third-highest unemployment rate — was not merely a threat to turn down federal funds but a trip to Washington to actively lobby against the stimulus bill. He accused the three Republican senators who voted for it of sabotaging “the future of our civilization.” In his mind the future of civilization has little to do with the future of students like Ty’Sheoma Bethea.

What such G.O.P. “stars” as Sanford and Jindal have in common, besides their callous neo-Hoover ideology, are their phony efforts to portray themselves as populist heroes. Their role model is W., that brush-clearing “rancher” by way of Andover, Yale and Harvard. Listening to Jindal talk Tuesday night about his immigrant father’s inability to pay for an obstetrician, you’d never guess that at the time his father was an engineer and his mother an L.S.U. doctoral candidate in nuclear physics. Sanford’s first political ad in 2002 told of how growing up on his “family’s farm” taught him “about hard work and responsibility.” That “farm,” the Charlotte Observer reported, was a historic plantation appraised at $1.5 million in the early 1980s. From that hardscrabble background, he struggled on to an internship at Goldman Sachs.

G.O.P. pseudopopulism ran riot last week as right-wing troops rallied around their latest Joe the Plumber: Rick Santelli, the ranting CNBC foe of Obama’s mortgage rescue program. Ann Coulter proposed a Santelli run for president, and Twitterers organized national “tea parties” to fuel his taxpayers’ revolt. Even with a boost from NBC, whose networks seized a promotional opening by incessantly recycling the Santelli “controversy,” the bonfire fizzled. It did so because — as last week’s polls also revealed — the mortgage bailout, with a 60-plus percent approval rating, is nearly as popular as Obama.

The Santelli revolution’s flameout was just another confirmation that hard-core Republican radicals are now the G.O.P.’s problem, not the president’s. Rahm Emanuel has it right when he says the administration must try bipartisanship, but it doesn’t have to succeed. Voters give Obama credit for trying, and he can even claim success with many Republican governors, from Schwarzenegger to Crist. Now he can move on and let his childish adversaries fight among themselves, with Rush Limbaugh as the arbitrating babysitter. (Last week he gave Jindal a thumb’s up.)

But that good news for Obama is countered by the bad. The genuine populist rage in the country — aimed at greedy C.E.O.’s, not at the busted homeowners mocked as “losers” by Santelli — cannot be ignored or finessed. Though Obama was crystal clear on Tuesday that there can be “no real recovery unless we clean up the credit crisis,” it was telling that he got fuzzy when he came to what he might do about it. He waited two days to drop that shoe in his budget: a potential $750 billion in banking “asset purchases” on top of the previous $700 billion bailout.

Therein lies the Catch-22 that could bring the recovery down. As Obama said, we can’t move forward without a functioning financial system. But voters of both parties will demand that their congressmen reject another costly rescue of it. Americans still don’t understand why many Wall Street malefactors remain in place or why the administration’s dithering banking policy lacks the boldness and clarity of Obama’s rhetoric.

Nor can a further bailout be easily sold by a Treasury secretary, Timothy Geithner, whose lax oversight of the guilty banks while at the New York Fed remains a subject of journalistic inquiry. In a damning 5,600-word article from Bloomberg last week, he is portrayed as a second banana, a timid protégé of the old boys who got us into this disaster. Everyone testifies to Geithner’s brilliance, but Jindal, a Rhodes scholar, was similarly hyped. Like the Louisiana governor, the Treasury secretary is a weak public speaker not because he lacks brains or vocal training but because his message doesn’t fly.

Among the highlights of Obama’s triumphant speech was his own populist jeremiad about the “fancy drapes” and private jets of Wall Street. But talk is not action. Two days later, as ABC News reported, the president of taxpayer- supported Bank of America took a private jet to New York to stonewall Andrew Cuomo’s inquest into $3.6 billion of suspect bonuses.

Handing more public money to the reckless banks that invented this culture and stuck us with the wreckage is the new third rail of American politics. If Obama doesn’t forge a better plan, neither his immense popularity nor even political foes as laughable as Jindal can insulate him from getting burned.

VIDEO: Obama and His Economic Plan are Confused

Posted in Afghanistan, Barack Obama, Economy, politics by allisonkilkenny on February 28, 2009

stiglitz_joseph300Note from Allison: This is Joseph Stiglitz. He’s the most cited economist in the world, a Nobel Laureate, and the guy who first price-tagged the Iraq war at $3 trillion. As you’ve probably already gathered, he’s a genius. Also, he’s smart, which is different than genius because it means he possesses the gift of “breakin’ it down,” and speaking simply so we mortals can understand him.

He very clearly explains why Obama has devised a plan to help the banks, and not the bankers, and he also details what we need to do in order to change our financial system. Well worth the watching.

DN

Watch the videos here.

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Struggling States Consider Legalizing Pot and Taxing Porn

Posted in Economy, politics by allisonkilkenny on February 28, 2009

NYT

drugs_cannabisIn his 11 years in the Washington Legislature, Representative Mark Miloscia says he has supported all manner of methods to fill the state’s coffers, including increasing fees on property owners to help the homeless and taxes on alcohol and cigarettes, most of which, he said, passed “without a peep.”

And so it was last month that Mr. Miloscia, a Democrat, decided he might try to “find a new tax source” — pornography.

The response, however, was a turn-off.

“People came down on me like a ton of bricks,” said Mr. Miloscia, who proposed an 18.5 percent sales tax on items like sex toys and adult magazines. “I didn’t quite understand. Apparently porn is right up there with Mom and apple pie.”

Mr. Miloscia’s proposal died at the committee level, but he is far from the only legislator floating unorthodox ideas as more than two-thirds of the states face budget shortfalls.

“The most common phrase you hear from the states is ‘Everything is on the table,’ ” said Arturo Perez, a fiscal analyst with National Conference of State Legislatures, who predicted the worst financial year for states since the end of World War II.

Nowhere is that more true than California, where Assemblyman Tom Ammiano, a freshman from San Francisco, made a proposal intended to increase revenue, and, no doubt, appetite: legalizing and taxing marijuana, a major — if technically illegal — crop in the state.

“We’re all jonesing now for money,” Mr. Ammiano said. “And there’s this enormous industry out there.”

In Nevada, State Senator Bob Coffin said he would introduce legislation to tax the state’s legal brothels, a fee that would be “based on the amount of activities.” And unlike the Washington porn proposal, which drew the ire of the adult entertainment industry, Mr. Coffin’s plan has the backing of the potential taxpayers, in this case brothel owners who employ women as independent contractors.

“I think they figure if they become part of the tax stream, the less vulnerable they will be to some shift in mores,” he said.

Hawaiian legislators were also considering capitalizing on another potential shift in public attitudes when they proposed legalizing same-sex unions, which supporters say could help the slumping tourism trade.

In Massachusetts, meanwhile, state legislators have introduced a proposal to build two resort-style casinos, including one in Boston. A similar push died last year in the State House of Representatives. But Representative Martin J. Walsh, a Dorchester Democrat and co-author of the new casino bill, said a $2 billion budget deficit might have changed some minds.

“Every state in the nation, including Massachusetts, needs to figure out a way of raising revenues,” Mr. Walsh said. “So we need to be creative.”

Scott Pattison, executive director of the National Association of State Budget Officers, said many lawmakers were loath to tap more traditional tax sources during a downturn.

“What’s pushing it is this incredible desire to raise revenue,” he said. “But it’s coupled with the desire not to raise the general and sales and income taxes.”

Whether such proposals can pass is another issue, though each idea has its supporters. Betty Yee, chairwoman of the California Board of Equalization, the state’s tax collector, said that legal marijuana could raise nearly $1 billion per year via a $50-per-ounce fee charged to retailers. An additional $400 million could be raised through sales tax on marijuana sold to buyers.

The law would also establish a smoking age — 21 — effectively putting marijuana in a similar regulatory class as alcohol or tobacco. Marijuana advocates argue that legalization could also decrease pressure on the state’s overburdened prison system and law enforcement officers.

All of which, Ms. Yee said, at least makes the proposal worth talking about in a state with chronic budget problems and a law already on the books allowing the medical use of the drug.

“We know the product is out there, and we know marijuana is available to young people as well, but there’s no regulatory structure in place,” Ms. Yee said. “I think it’s an opportunity to begin the debate.”

Such a debate, of course, does not always favor tax innovators, and several law enforcement groups have already objected to the idea of legal marijuana, which would conflict with federal law.

John Lovell, a lobbyist for several groups of California law enforcement officials, said the plan would create a large, illicit — and thus untaxed — black market, in addition to magnifying substance abuse problems. “The last thing we need is yet another legal substance that is mind-altering,” he said.

Having taxes on illegal activities — like a seldom-collected tax on marijuana sales in Nevada — also has its drawbacks, said Robert MacCoun, a professor of law and public policy at the University of California, Berkeley, who has researched drug policy.

“It is very hard to tax illegal vices unless one is comfortable with contradiction,” Mr. MacCoun said. “How can you collect the taxes without documenting the behavior? And how can you document the behavior without making an arrest?”

In Washington State, Mr. Miloscia said he had also received criticism from an array of residents and business owners, who accused him of attacking the First Amendment and other sacred institutions with his porn proposal.

“I had people call up saying their marriages would fall apart,” said Mr. Miloscia, who represents a suburban district between Tacoma and Seattle. “I didn’t know how passionate people are about this stuff.”

White House Intel Briefings Follow Economic Unrest

Posted in CIA, Economy by allisonkilkenny on February 28, 2009

policeman_shooting_plastic_bullets_at_demonstrators_in_eattleDN

CIA director Leon Panetta has revealed the global financial crisis is now being tracked in the daily intelligence briefing prepared for President Obama. In his first news conference, Panetta said Obama is being briefed on how the financial crisis is unfolding and its effect on the stability of countries worldwide. Earlier this month, National Intelligence Director Dennis Blair said economic troubles have surpassed terrorism as the nation’s top security threat. Panetta also says Latin American intelligence officials have warned the US of a crisis spreading through the hemisphere. The officials highlighted developments in Argentina, Ecuador and Venezuela, Panetta said.

Even Worse for Young Workers

Posted in Barack Obama, Economy, labor, poverty by allisonkilkenny on February 28, 2009

Bob Herbert

unemployment-line-749345The employment situation in the U.S. is, if anything, worse than most people realize. And huge numbers of young people, ages 16 to 30, are being beaten down in ways that could leave scars for a lifetime.

Much of the attention in this economic downturn has focused on the growing legions of men and women who are officially counted as unemployed. There are now more than 11 million of them.

But a better picture of the economic distress related to employment emerges when the number of jobless Americans is combined with two other categories of workers: the underemployed (those who are working part time, for example, because they can’t find full-time work) and the so-called labor force reserve, workers who have abandoned their job searches but who would work if employment became available.

This total pool of underutilized labor has now risen above 24 million, according to researchers at the Center for Labor Market Studies at Northeastern University in Boston. That total will only grow in the coming months.

The Obama administration has more than enough on its plate at the moment, but before long it will likely have to consider a range of additional strategies, beyond the recently passed stimulus package, for putting jobless Americans to work.

A comparison of the number of people being thrown out of work in this recession with that of the severe recession of 1981-82 will indicate why. The peak unemployment rate was higher in that earlier recession than today’s 7.6 percent, largely because the last big wave of the baby-boom generation was entering the job market in the early ’80s. Those boomers who couldn’t find work were officially counted as unemployed.

What is different and more frightening about the current downturn is the number of people actually losing their jobs — being laid off or fired. That number is dramatically, dangerously higher.

The government uses two different surveys to gauge employment data. The household survey, based on telephone interviews, showed that job losses in the 13 months that followed the beginning of the 1981-82 recession reached 1.53 million. In the first 13 months of this recession, the number of jobs lost, according to the household survey, has been a staggering 4 million.

The payroll survey, which is based on employment records, showed job losses of 1.7 million in the first 13 months of the earlier downturn compared with 3.5 million in the current recession.

Pick your poison. This is not the kind of downturn Americans are used to.

The ones who are being hit the hardest and will have the most difficult time recovering are America’s young workers. Nearly 2.2 million young people, ages 16 through 29, have already lost their jobs in this recession. This follows an already steep decline in employment opportunities for young workers over the past several years.

Good jobs were hard to find for most categories of workers during that period. One of the results has been that older men and women have been taking and holding onto jobs that in prior eras would have gone to young people.

“What we’ve seen over the past eight years, for young people under 30, is the largest age reversal with regard to jobs that we’ve ever had in our history,” said Andrew Sum, the director of the Center for Labor Market Studies. “The younger you are, the more you got pushed out of this labor market.”

There were not enough jobs to go around before the recession took hold. So the young, the poor and the poorly educated were already suffering. Now that pool of suffering is rapidly expanding.

This has ominous long-term implications for the country. The economy cannot perform well with such a large cohort of young people condemned to marginal economic status.

Young men and women who remain unemployed for substantial periods of time find it very difficult to make up that ground. They lose the experience and training they would have gained by working. Even if they eventually find employment, they tend to lag behind their peers when it comes to wages, promotions and job security.

Moreover, as the economy worsens, even the college educated are feeling the crunch.

According to a report by researchers working with Mr. Sum: “While young college graduates have fared the best in maintaining some type of employment, a growing fraction of them are becoming mal-employed, holding jobs in occupations that do not require much schooling beyond high school, often displacing their less-educated peers.”

Employment problems have festered in the United States for decades. The economy will never be brought to a state of health until those problems are more thoughtfully and more directly engaged. This will become more and more clear with each passing month of this hideous recession.

Iraq and Afghanistan: Consider the Alternative

Posted in Afghanistan, Barack Obama, Economy, military, politics by allisonkilkenny on February 27, 2009

Today, President Obama unfurled his shiny plan to keep 35,000 to 50,000 U.S. troops  in Iraq under a “new mission of training, ” and to send 17,000 more troops into Afghanistan. This may seem like a sleight of hand artifice (removing troops from Point A, only to drop them in Point B,) but many hawkish pundits, columnists, and bloggers respond to criticism of Obama’s plan by deploying the straw-man directive for readers to “consider the alternative.”

Meaning, I guess, we’re supposed to concede the point that keeping armed forces in Iraq is better than some imagined, hypothetical scenario where all hell breaks loose the second our forces leave, the country dissolves into sectarian warfare (worse that the civil strife that has already occurred,) and some kind of apocalyptical genocide breaks out (the kind of genocide we care about, not the Darfur or Congo kind.) 

Let’s set aside the points that sectarian violence may be declining because of mass exoduses from Iraq, a significant amount of the population being dead, and US forces bribing Iraqis not to shoot each other, (all of which the Washington Post described as troops “stop(ping) a sectarian civil war.”) What is this “alternative” I’m supposed to be considering? 

Over at Politico, Yousef Munayyer imagines the alternative to permanent occupation as crafty foe behaving themselves only until the final US Blackhawk helicopter departs the Iraq landscape so they can then rain down terror upon the population.  

The fundamental problem with measuring success in the fight against insurgency is that we can never be sure if they have stopped fighting because they have given up or because they are just laying low and waiting for us to leave. I don’t know if I would call 50,000 troops “residual” but the heart of the problem is that we simply can’t move out quicker because we just don’t know what will happen

This is a variation of the “consider the alternative” argument. Because the US military does not yet possess the gift of clairvoyance, we have to remain committed in the region indefinitely because, gee, just consider what might happen in this hypothetical I’ve invented.

It’s like John McHugh (R-NY) said today after his meeting with Obama. We have to consider the possibility that something bad may happen, like “the situation on the ground deteriorat(ing) and violence increas(ing),” which may very well happen because, ya’ know, we totally ripped apart the Iraqi infrastructure and societal fabric. But how do US troops occupying the region convey a new era of autonomy and peace to the Iraqis? They don’t. They can’t. Their presence just delays the inevitable: US troops leaving the region, and chaos and strife following a tumultuous time, followed by (hopefully) rebuilding. That’s what will happen if the troops leave tomorrow. That’s what will happen if the troops leave in December. The only difference is less men and women of all nationalities will die if it happens tomorrow.

To be sure, Iraq and Afghanistan are tremendously volatile regions, but deploying the “consider the alternative” argument is manipulative. Sure, something bad can happen at any given moment. Something bad might be happening in Denmark right now, or rather, something bad may happen eventually. That’s a 1% chance, and Dick Cheney says that’s all we need. Shall we invade? Something bad is actually happening in Darfur and the Congo right now, so why aren’t our troops on their way there?

We don’t know what may happen, but we do know what has happened. The wars have been disastrous, and the explanations for the decrease in violence in Iraq ranges from speculative to insincere. Killing off the population and bribing those who remain isn’t a diplomatic strategy. It’s making the best of a fucked-up situation. It’s reason for shame, but it’s certaintly not a mandate to stay in the region indefinitely because a handful of hawkish pundits keep lobbing hypotheticals at the American population.

It’s just until December! comes the scream  of rationalization for a new Magic Number pull-out date. We have to remain in the region until December to ensure a fair, free election.  Mind you, we can’t figure out how to run our own elections, but we’re going to import democracy to the Iraqis. International organizations independently monitor elections all the time, but suddenly we need an occupying force to handle procedures. With the help of the UN, elections are held in 14 of Iraq’s 18 provinces, with about 15 million citizens eligible to vote. If we’re hanging around to see how the Iraqis really feel about the US occupation, they’ve already been abundantly clear that they want us gone. Furthermore, it’s more than a little insulting to imply that Iraqis can’t handle their own elections without Big Brother America holding their hands throughout the process. It’s also ridiculous to imply Iraqis are somehow better off with Americans in their country. In some respects, things in Iraq are worse now than they were pre-American invasion. Take, for example, the looting of museums, disappearance of electricity, and appearance of smoking craters. 

“In an ideal world, the Iraqi security forces could handle the election security themselves,” says Dennis Hertel (D-MI), Vice-President of the International Elections Monitors Institute (IEMI). “Whenever there is a threat, you have to make sure the security is adequate so people can vote. Violence is intimidation for the people participating in the election.” And Hertel admits that the best possible scenario is for third party, international watch groups to monitor the elections without a military presence: “The best thing is if you don’t have to have armed forces, or even legal officers for elections.”

Surely, Iraqis may need help rebuilding, training their military, and protecting their citizens, but a unilateral occupation isn’t the answer to their problems. It is only a promise of continued strife and violence. If the United States is serious about helping (and not occupying,) they should throw full support behind the UN and look for partners in the international community to provide non-military aid.

I guess we’re supposed to take Obama’s new Iraq and Afghanistan plans very seriously because they suddenly have bipartisan support. But the fact that John McCain, the man who once said that it would be totally cool if our troops remained in Iraq “for 100 years,” now agrees with Obama’s wartime policies is a very, very bad sign. When McCain later had to explain his comment because it was tremendously awful, he cited a longstanding, ugly truth of American power: we occupy a lot of countries. It’s just part of that crazy stuff we do all the time. 

US Military Bases

US Military Bases (Wikipedia)

There are 737 military bases scattered around the planet, which staff roughly 2,500,000 US military personnel. It’s become commonplace to send our troops to foreign countries and station them there indefinitely. It’s become so banal that the so-called Progressive candidate, Barack Obama, can admit to keeping 35,000-50,000 armed troops in Iraq (with no deadline,) toe the line with John McCain and John Boehner, and the mainstream media accepts that this is a responsible, sane plan. It’s accepted because, once again, something bad is out there…waiting.

The Taliban are bad news. Hardly anyone disputes that. They terrorize innocents (particularly women, young girls, and anyone trying to receive an education,) but unilateral military action has never nurtured diplomatic relations. America has been in Afghanistan for eight years, and all that has been accomplished is a resurgent Taliban insurgency that is busily overwhelming areas of Pakistan, a country with a nuclear weapon. But a continuation of unilateral firebombing of civilian-populated regions doesn’t work. Unlike the reasons to stay in the Middle East afforded to us by the mainstream media, that’s not speculation.

Occupying a country and terrorizing the population ensures only one thing: blowback. Yes, pulling out of Iraq may lead to bad things that will demand attention from the international community and the UN, but the United States galavanting across the region and crushing indigenous people inspires only hatred. 

This isn’t some radical, new lesson we have to learn. We’ve known this since 1991 during the Gulf War, when our Saudi Arabia-stationed bases pissed off this guy named Osama bin Laden. How many little Osamas are witnessing the brute, awful strength of the US military in Iraq and Afghanistan? How many members of their families and communities have our troops killed?

This just doesn’t make sense for Obama’s administration, or for our country. Our military and money is spread preciously thin. As Paul Krugman explained in his column today, Obama’s economic plan just may work, as long as nothing bad happens (like blowback from our irresponsible and irrational actions abroad):

According to the Obama administration’s budget projections, the ratio of federal debt to G.D.P., a widely used measure of the government’s financial position, will soar over the next few years, then more or less stabilize. But this stability will be achieved at a debt-to-G.D.P. ratio of around 60 percent. That wouldn’t be an extremely high debt level by international standards, but it would be the deepest in debt America has been since the years immediately following World War II. And it would leave us with considerably reduced room for maneuver if another crisis comes along.

That doesn’t really sound like Era of Responsibility, does it? Everything will be fine as long as nothing bad happens ever again because of these stupid things we’re doing in other people’s countries, and none of the people we’re bombing remember it was us, who bombed them. I’m sure Krugman wasn’t imagining another 9/11 in his hypothetical, but it’s a distinct possibility considering we’re broke, and our military is crouched in a foreign desert, messing with the locals.

A long-term goal for this mess should be to make the Taliban and radicalism unappealing. That won’t happen if we keep bombing countries. Poor, desperate people tend to falls into the clutches of radicalism because radicals can point up to the American jets that just decimated entire villages and say, “They did it.” Militarism only fuels more anti-America fervor. Charity and multilateral efforts to help a people (not through occupation,) but through aid will gradually make such radicalism unappealing. It’s not  a quick fix. It will take generations, but it’s worth adopting some patience into our foreign policy strategies.

And sure, there will always be a handful of baddies out there that hate us (and will always hate us,) and they’ll try to hurt us. But let’s consider this alternative: A surplus in the economy from the money saved not waging wars abroad, and a strong military at home (including care for veterans.) Imagine skilled interrogators, who know how to coax forth answers with a game of chess, and not waterboarding. Imagine well-trained intelligence officers networking abroad, or new, secure American infrastructure and a well-funded FDA to keep our food safe. Imagine justice and accountability, and the permanent banishment of secret prisons and tribunals so that future terrorist attacks cannot possibly be justified to the world as self-defense or “pay back.”

Even in this imagined alternative, we can never be fully protected from the possibility of something bad happening. We can only be properly equipped to deal with the aftermath in a rational way. What we certainly do not need is 35,000-50,000 troops in Iraq and 17,000 more troops in Afghanistan. No imagined alternative will justify this empirical behavior.

VIDEO: Bernie Sanders to the Rescue

Posted in Barack Obama, Economy, politics by allisonkilkenny on February 27, 2009

ZP Heller, Brave New Foundation (h/t Alternet)

sandersPresident Obama delivered a fantastic speech Tuesday night. It’s tone alone will go a long way toward reassuring a nation mired in economic crisis.

And amazingly, there were many moments of bipartisan applause, like when Obama tackled corporate greed: “I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer. This time, CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over.”

This was music to my ears, but as Robert Scheer astutely pointed out at The Nation, the problem Obama had in discussing regulation to fix our financial woes is that many of his top economic advisors, including Lawrence Summers, were responsible for gutting the regulatory system that helped cause this mess in the first place.

Don’t get me wrong, Obama’s speech was strong, and hopefully it will symbolize a fundamental change in thinking from his economic team. But I’m just glad we have someone like Sen. Bernie Sanders, I-Vt., to help Obama make good on his demagoguery.

The independent senator from Vermont says we need a new Wall Street. He wants to confront the culture of greed head on, get rid of the CEOs of these corrupt financial institutions and establish a much stricter regulatory process.

Sanders has been a vocal critic of TARP spending from the beginning, and last month he called for the congressional TARP Oversight Panelto expand its focus and dig into the causes of the financial crisis, using subpoena power to expose the roots.

Sanders’ vigilance and frankness, coupled with Obama’s rhetoric Tuesday night, gives me hope.

ZP Heller is the editorial director of Brave New Films. He has written for The American Prospect, AlterNet, The Philadelphia Inquirer, and The Huffington Post, covering everything from politics to pop culture.

Watch the video here.

Criticizing Ty’Sheoma Bethea

Posted in Barack Obama, Economy, education, politics by allisonkilkenny on February 27, 2009

Joan Walsh, Salon

michellehugI thought it would come from Michelle Malkin or Rush Limbaugh, but Malkin is too busy planning her anti-tax tea parties while Rush gets ready for his close-up at the Conservative Political Action Committee this weekend (which is a collection of nuts so nutty even Sarah Palin stayed away).

No, it was the conservative Washington Times that cast the first stone at Ty’Sheoma Bethea, the Dillon, S.C., teenager who wrote to Congress seeking stimulus funds for her shamefully dilapidated school. Obama used her statement, “We are not quitters,” as the coda of his speech Tuesday night, but now the Moon-owned paper tells us what’s wrong with Bethea, in an editorial with the condescending headline, ‘Yes, Ty’Sheoma, there is a Santa Claus.”

Obama “presented” Bethea “as a plucky girl from a hopeless school who took it on herself to write the president and Congress asking for much needed help,” the Times began, ominously. Wait, she’s not a plucky girl from a hopeless school? The editorial depicts her instead as a player in Obama’s “mere political theater” because the president has been using her school, J.V. Martin, as a “political prop” since he first visited in 2005. Wow. Dastardly.  I’m getting the picture: Obama, that slick Democrat opportunist, has repeatedly visited one of the poorest schools in South Carolina, a state that voted for John McCain.  You just know he leaves with his pockets stuffed with cash every time he makes the trip.

It gets worse. The Times insists Dillon residents haven’t been callous about conditions at Ty’Sheoma’s school; in fact they passed a 2007 bond measure to reconstruct it. That’s true, but it’s only part of the story: The Chicago Tribune’s Howard Witt reported that the bond measure “ran aground of the national credit crisis: No bank will loan the school district the construction funds.” 

Facts be damned. To the Times, the plight of J.V. Martin is actually a story of how locals can solve their own problem, but Ty’Sheoma and Obama have hijacked it to make it an example of how only the federal government can help. Obama said Ty’Sheoma’s letter reflected “a willingness to take responsibility for our future and for posterity.” The Times disagrees: “What is on display is not responsibility but irresponsibility. This is the new reality in America, that those with political pull will benefit, those without will not … Connections are replacing competence as a measure of a person’s worth.”

Got it? Ty’Sheoma Bethea, she’s no enterprising teen from a broken-down school. She sounds like the new Jack Abramoff, using her “political pull” and “connections” to benefit herself.

Yes, they’re that crazy.