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The Republican's Faux Assistance Bill, Dems Must Oppose

Here's a summary of what is in the Republican's $2 trillion spending bill to reboot the economy. It's a bailout of big industry and business and a pittance for individuals.

It's also money that mostly has to be repaid. With what? Donald Trump's belief that when this is over our economy will "skyrocket" and the companies on the receiving end will be able to repay these humongous loans? [More...]

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White House Coronavirus Briefing: "We Have to Save Our Big Companies"

Donald Trump's Coronavirus Task Force is scheduled to speak to the nation in a few minutes. You can watch live online here.

The procedural vote on the Republican's Trillion Dollar [Corporate] Aid bill has been delayed. ET.

It sounds like the deal has fallen apart, and Nancy Pelosi said today the Dems will introduce their own bill.

I hope everyone reading this is feeling okay.

Update: Trump was abysmal in his delivery. He read from his speech, not a teleprompter, which it sounded like he hadn't even read before taking the podium. He rambled on about something having to do with rescuing a woman who was "horribly treated" and "terribly abused" somewhere and we needed Honduras' government's approval to "get her out of there". (Maybe that was the reason the presser started an hour late? This must be her.) [More...]

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Depression, Not Recession is Looming

I think America will recover from the coronavirus much faster than the economic calamity that is befalling the country. I think we passed recession months ago and are now headed into a 1920's style depression. For more technical explanations, see Axios here . I don't know how the economy bounces back after this. This is not like fighting a world war -- it seems like Americans will soon be fighting a domestic economic battle, for food, shelter and other basics of life. [More...]

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NYSE Suspended Trading After Stocks Tank: Trump Clueless?

An automatic circuit tripper was triggered this morning when the NYSE opened due to the worst drop in the Dow Jones average since the financial crisis of October, 2008 (and before that, 9/11):

The Dow Jones Industrial Average tanked 1,247 points — 4.8% — on pace for its worst day since December 2008, while the S&P 500 plunged 4.9%. The massive sell-off triggered a key market circuit breaker minutes after the opening bell. Trading was halted for 15 minutes until reopening at 9:49 a.m. ET. At one point in morning trading, the 30-stock Dow dropped 2,046 points and the S&P 500 cratered 7.4%.

This is the first time the trigger was activated since 1997.

As for why the Dow freaked out, it's fears over the oil trade deal and the coronavirus.[More...]

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Mexico Imposes Tariffs on U.S. Exports

Mexico has carried through with its threat to impose tariffs on some items the U.S. exports to Mexico.

With its presidential election 26 days away, Mexico’s government imposed a 20 percent tariff on U.S. pork, apples and potatoes and 20 to 25 percent tariffs on cheese and bourbon. Mexico tailored the list of retaliatory duties to hit states governed by senior Republicans, such as the bourbon produced in the home state of Senate Majority Leader Mitch McConnell (Ky.).

Donald Trump: The art of the deal, he is not. Not only is Mexico not paying for his wall, now U.S. manufacturers of these goods will suffer. According to Quartz, Trump's steel tariffs will cost Americans 400,000 jobs.

Here is an NPR article from 2015, How NAFTA changed American (and Mexican) Food Forever, and the U.S. Department of Agriculture's May 31, 2018 quarterly report, Outlook for U.S. Agricultural Trade.

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The Power of Oprah

Weight Watcher's stock soared today. Why? Oprah Winfrey, now a 10% shareholder in the company, released an ad featuring Oprah and Oprah sent out a tweet with the ad. That's apparently all it took.

I have always liked Weight Watchers. It was founded in the early 1960's by Jean Nidetch, then a Brooklyn housewife and compulsive eater. Her partners were her overweight husband and another couple. Within 5 years, there were 5 million members and franchises everywhere. The message was that over-eating is an emotional problem.

Jean died last April at age 91. I spent a week at a health spa with her in the early 80's, which was a few years after she and her partners sold the company to R.J. Heinz (for $71.2 million) and probably around the time she retired from her public relations role.

She was very smart and funny and fun to be around.

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Geithner's Failure

For those who remember all my posts on former Treasury Secretary Tim Geithner on his failed policies on helping homeowners, here are some fancy Chicago economics professors saying the same thing:

Atif Mian and Amir Sufi are convinced that the Great Recession could have been just another ordinary, lowercase recession if the federal government had acted more aggressively to help homeowners by reducing mortgage debts.

The two men — economics professors who are part of a new generation of scholars whose work relies on enormous data sets — argue in a new book, “House of Debt,” out this month, that the government misunderstood the deepest recession since the 1930s. They are particularly critical of Timothy Geithner, the former Treasury secretary, and Ben Bernanke, the former Federal Reserve chairman, for focusing on preserving the financial system without addressing what the authors regard as the underlying and more important problem of excessive household debt. They say the recovery remains painfully sluggish as a result.

Geithner really stunk.

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Obama Signs Sequester Order

It's official. President Obama has signed the order for sequester.

Here is the text of the statement he made today.

Memo to CBS News: You've been added to the do not read list for automatically playing videos when readers click on a link to your news articles.

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Sequester

Apparently, we are hours away from a sequester. Obama is meeting with House leaders. No agreement is expected.

If the sequester kicks in, the New York Times says this is what will happen. What I learned from that article: Nothing. It seems nobody knows (which I guess was the point of the article.)

Are cuts coming to law enforcement? Will there be fewer arrests? Will the Bureau of Prisons budget be cut so that more prisoners have to be released? I'd bet not.

What do you think the cuts will mean?

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Senate Passes Fiscal Cliff Bill, 89 to 8

Update 12:10 am MT : The Senate passed the fiscal cliff bill. Sens. Rand Paul, Carper (D-DE), Tom Harkin, Michael Bennet, Rubio, Grassley, Shelby and Lee voted against it. The vote is 89 to 8. The House will not vote tonight. AP article here.

Interesting that Colorado Senator Mark Udall voted for it while Senator Michael Bennet voted against it -- both are Democrats. Here's why Tom Harkin opposed it.

One additional saving: Congress won't be getting a $900 pay raise scheduled to take effect this spring.

Update: 11:45 pm MT: The Senate is now voting. [More...]

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CNN Poll: Americans Think 'Fiscal Cliff' A Crisis, Favor Tax Increases and Spending Cuts

I know what your thinking - if Americans think the fiscal cliff is a crisis, why are they in favor of what the fiscal cliff does (increases taxes and cut spending?) Cuz the American electorate is not the sharpest pencil in the box and the American Media is well matched to that. Consider from CNN:

"Americans definitely feel that they have something at stake in the upcoming negotiations - 77% believe that their personal financial situation will be affected if the government goes off the fiscal cliff," said CNN Polling Director Keating Holland.

At issue in the negotiations is a disagreement between the two major political parties over how to best raise the federal government's revenues. The president and most congressional Democrats argue for tax rate increases on the wealthiest Americans in order to raise revenue, while most congressional Republicans call for the closing of loopholes and reform in the tax code. Both parties have indicated a willingness to implement spending cuts, although a decision over how much and where has yet to be made.

So what does the public think? Two thirds of those questioned in the poll say that any agreement should include a mix of spending cuts and tax increases, with just under one in three saying a deal should only include spending cuts.

If the 'fiscal cliff' is a crisis, and it is not the right policy right now, imo, it is the TIMING that brings the urgency, not the specific policy mix. This is not the time to be cutting government spending. It is time to increase it in stimulative ways. But the Media either does not understand this, or instead chooses to ignore it. One last point - when did Republican agree to increase tax revenue? CNN is making that up.

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Asking The Wrong Questions On Tim Geithner

Both Matt Yglesias and Kevin Drum simply ask the wrong questions with regard to the disastrous tenure of Tim Geithner as Treasury Secretary.

The startng point of the discussion is Neil Barofsky's criticisms of Geithner's refusal to consider measures that truly help homeowners and consumers if such measures in any way are opposed by the banks.

Using Ezra Klein's interview of Barofsky, Yglesias writes:

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TARP and the Incompetence of Tim Geithner

Neil Barofsky:

In the year since I stepped down as the special inspector general of the Troubled Asset Relief Program, the sadly predictable consequences of the government’s disparate treatment of Wall Street and Main Street have only become worse. As the banks amass size and power, Main Street continues to get pummeled.

Part of the current economic malaise can be traced directly to Treasury’s betrayal of its promise to use TARP to “preserve homeownership.” The Home Affordable Modification Program has brought little meaningful improvement, with fewer than 800,000 ongoing permanent modifications as of March 31, 2012, a number that is growing at the glacial pace of just 12,000 per month.

What Barofsky said. Tim Geithner is a corrupt incompetent. If Obama loses, Geithner will be one of the main reasons why.

Speaking for me only

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The Limits Of Monetary Policy In Addressing Today's Economic Crisis

Via Atrios (not sure what he thinks about this), the WSJ writes about the Fed's ability to lower interest rates has been rather ineffective at spurring demand:

The U.S. recovery is hobbled by an economic divide that separates Americans not by income or wealth but by their access to credit. The housing bust left behind millions of people with credit records damaged by plunging home prices, lost jobs, past overspending or bad luck. Many are now walled off from the low interest rates engineered by the Federal Reserve to spur the economy and remedy the aftereffects of the borrowing boom.

Shrunken access among credit have-nots is triggering more than personal plight. It has weakened the influence of the Fed—one of the best hopes for spurring stronger economic growth—and raised doubts within the central bank about whether it is doing much to reduce unemployment.

The credit divide factors into their thinking. Fed officials have been frustrated in the past year that low interest rate policies haven't reached enough Americans to spur stronger growth, the way economics textbooks say low rates should.

It never factored into the VSP's thinking about the housing and homeowner crisis. This is the failure of Tim Geithner especially, who blocked real help for homeowners while choosing to give free money to the banks.

The banks are fine now. The country is not.

Geithner remains a corrupt incompetent who, if Obama loses, will be the cause of the loss.

Speaking for me only

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It's The Tax Policy, Stupid

In a column arguing for short term stimulus, Peter Orzag writes:

When policy makers put in place measures carefully designed to reduce the federal deficit in the future, most of them happen. This is a good thing, since enacting more stimulus today and more deficit reduction to take effect later is exactly what the U.S. needs. It’s also what makes the ongoing jobs-versus-austerity debate so frustrating. What we really need is to be bolder on both jobs and austerity, by pursuing a combination policy.

Those who are most concerned about the weak labor market should be most willing to do whatever it takes -- including combining delayed budget cuts with stimulus -- to get the most stimulus passed. And those who favor a combined approach shouldn’t be characterized (as I have been) as pro-austerity and anti-stimulus.[...] [Emphasis supplied.]

Someone hurt Peter Orzag's fee fees. A couple of points: Orzag is arguing for "maximum stimulus now." Where was he in January 2009? Second, his statement about spending cuts in the social safety net is true. But tax increases for deficit reduction NEVER survive. It's funny how to Orzag, the Clinton tax increase of 1993, the most important deficit reduction measure of the last 25 years, is not even worth a mention. Of course we know why, it undermines his argument. THAT deficit reduction measure did not hold. Taxes were cut twice during the Bush Administration. So Orzag says we should agree with him to cut spending in the future for more spending now. But what about the Bush tax cuts?

Sorry Mt. Orzag, you are pro-austerity and pro cutting the social safety net. It's what you don't write about that proves it to me - tax policy.

Speaking for me only

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