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Summary: America's Financial Crisis: Week of August 8

5 New Items including:

  • Five myths about the Bush tax cuts
  • The battle over Elizabeth Warren

David Culver, ed., Evergreene Digest

John Darkow

Jobless? Your leaders are at ease with that, Paul Krugman, New York Times

  • None of them want to fix it -- so high unemployment might become a habit.
  • Punishing the Jobless

Undocumented immigration: paying the price of NAFTA, Emile Schepers, People's World

  • A study published by the Carnegie Endowment for International Peace in December 2009 explains how this worked out in practice. ("Rethinking Trade Policy for Development: Lessons from Mexico under NAFTA")
  • The Economics Of Immigration Reform

Five myths about the Bush tax cuts, William G. Gale, Star Tribune | MN

  • A gloomy economic outlook...has given rise to a number of stubborn myths about what extending the Bush tax cuts would -- or wouldn't -- do.
  • Tax the rich more. (They can take it.)
  • Trickle Down Economics doesn't work
  • Top 5 Social Security Myths

What the NY Times is not telling you about the deficit, Rick Nagin, People's World

  • The deficit is largely a red herring - an issue being ginned up by the Republicans for the purpose of preventing Obama from making headway on economic recovery. They hope that anger and frustration over the ongoing crisis can be channeled into Republican votes in November.
  • Reagan’s budget David Stockman director calls GOP tax cuts delusional

The battle over Elizabeth Warren, John Case, People's World

  • Real consumer protection against fraud and misinformation in financial services is something the "financial sector" has fought for years. The catastrophe that required a $4 trillion public fiscal and credit injection into the economy makes no impression on the people whose reckless, unregulated behavior caused it, and whose bread is now buttered with its spoils.
  • The Case For Elizabeth Warren


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What the NY Times is not telling you about the deficit.

  • The deficit is largely a red herring - an issue being ginned up by the Republicans for the purpose of preventing Obama from making headway on economic recovery. They hope that anger and frustration over the ongoing crisis can be channeled into Republican votes in November.
  • Reagan’s budget David Stockman director calls GOP tax cuts delusional

Rick Nagin, People's World

In a major editorial last Sunday (August 1) entitled "What They're Not Telling You About the Deficit," the New York Times offers at best a partial solution to the problem of the deficit. The Times justifiably criticizes the Republicans, who blame stimulus spending and extension of unemployment benefits for the deficit. The Republicans fail to mention the tax cuts they enacted primarily under the Bush administration to benefit the super-rich.

Allowing the tax cuts for wealthy families to expire at the end of the year would generate $680 billion, a major chunk of the deficit that is expected to rise to $1.4 trillion this year.

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Reagan’s budget director David Stockman calls GOP tax cuts delusional, Teresa Albano, New York Times | NY
In an eye-opening, and at times hard-hitting article in Sunday's New York Times, President Reagan's budget director has slammed today's Republican Party for pushing to extend Bush-era tax cuts for the super-rich.

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Undocumented immigration: paying the price of NAFTA

  • A study published by the Carnegie Endowment for International Peace in December 2009 explains how this worked out in practice. ("Rethinking Trade Policy for Development: Lessons from Mexico under NAFTA")
  • The Economics of Immigration Reform

Emile Schepers, People's World

The rationale for NAFTA (North American Free Trade Agreement), which came into force Jan. 1, 1994, was Ricardian (after the Anglo-Italian classical economist David Ricardo, who thought that each country should specialize in the production that most suited its climate and other characteristics).

Much of Mexico's rural population was engaged in maize and wheat farming, which is much more productive in the vast plains of the central United States and Canada than in Mexico's more rugged terrain. So the idea was to push the grain farmers off the land and move them into specialized fruit and vegetable farming, and into manufacturing which was supposed to be attracted to Mexico by the cheap labor of displaced farmers.

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The Economics Of Immigration Reform, Matt Corley and others, Think Progress
While anti-immigrant groups use anecdotal evidence to erroneously claim<http://cis.org/UnemploymentAmongNativeWorkers>  that legalization would be disastrous for the American worker, passing comprehensive immigration reform would not only strengthen the labor market, it would promote needed economic growth.

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Summary: America's Financial Crisis: Week of August 1

3 New Items including:

  • Trickle Down Economics doesn't work
  • Not Too Big Enough

David Culver, ed., Evergreene Digest

Jim Day

Trickle Down Economics doesn't work says Alan Blinder. Here’s what does. Posted by rmontero, AlterNet

  • Redirecting money from the expiring Bush tax cuts to unemployment benefits would be a net job creator and give the economy a much-needed boost.
  • Long-Term Economic Pain

Long-Term Economic Pain, Bob Herbert, New York Times | NY

  • Simply stated, more and more families are facing utter economic devastation: completely out of money, with their jobs, savings and retirement funds gone, and nowhere to turn for the next dollar.
  • Reich and Krugman Agree: The Government Needs to Forget About the Deficit and Fix Unemployment
  • Krugman: US "Depressed Economy" Could Last 5 Years

Not Too Big Enough, Rob Larson, Dollars & Sense

  • How the “too-big-to-fail” banks got that way, and why the current banking reform won’t solve the problem.
  • US Financial Reform Bill Misses the Mark
  • Standing Up to the Unholy Alliance Between Washington and Wall Street


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Trickle Down Economics doesn't work says Alan Blinder. Here’s what does.

  • Redirecting money from the expiring Bush tax cuts to unemployment benefits would be a net job creator and give the economy a much-needed boost.
  • Long-term Economic Pain

Posted by rmontero, AlterNet

Top Economist Alan Blinder wrote this article last week supporting letting the Bush tax cuts on the rich expire.

The Basic idea behind it is that an unemployed person or a lower income person will spend any extra money he gets right away (he doesn’t have a choice) and thus stimulate the economy, whereas a rich person will save it and thus not stimulate the economy.

One thing that’s left out in almost all discussions is class. Most of the rich people that received the Bush tax cuts will make most of their money through investments and controlling businesses for a profit, most of the poor make their money on their labor. Any sound businessman knows the way you make a profit is to spend the least amount of money while profiting the most, any of the money you give to businessmen will be used to make them more money. That money won’t trickle down, hiring won’t increase simply because those doing the hiring have more money, hiring will only increase if those doing the hiring must hire more in order to make more profit, which will only happen when demand increases.

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Long-Term Economic Pain, Bob Herbert, New York Times | NY

  • Simply stated, more and more families are facing utter economic devastation: completely out of money, with their jobs, savings and retirement funds gone, and nowhere to turn for the next dollar.
  • Reich and Krugman Agree: The Government Needs to Forget About the Deficit and Fix Unemployment
  • Krugman: US "Depressed Economy" Could Last 5 Years

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Long-Term Economic Pain

  • Simply stated, more and more families are facing utter economic devastation: completely out of money, with their jobs, savings and retirement funds gone, and nowhere to turn for the next dollar.
  • Reich and Krugman Agree: The Government Needs to Forget About the Deficit and Fix Unemployment
  • Krugman: US "Depressed Economy" Could Last 5 Years

Bob Herbert, New York Times | NY

Submitted by Evergreene Digest Contributing Editor Lydia Howell

Bob Herbert

The pain coursing through American families is all too real and no one seems to know what to do about it. A rigorous new analysis for the Rockefeller Foundation shows that Americans are more economically insecure now than they have been in a quarter of a century, and the trend lines suggest that things will only get worse.

Rampant joblessness and skyrocketing medical costs are among the biggest factors tearing at the very fabric of American economic life so painstakingly put together in the early post-World War II decades.

The analysis was done by a team of researchers led by Professor Jacob Hacker of Yale University. They created an economic security index, which measures the percentage of Americans who experience a decrease in their household income of 25 percent or more in one year without having the financial resources to offset that loss. (Major medical expenses were counted as a decrease in available income.)

The team’s findings were grim. Simply stated, more and more families are facing utter economic devastation: completely out of money, with their jobs, savings and retirement funds gone, and nowhere to turn for the next dollar.

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Reich and Krugman Agree: The Government Needs to Forget About the Deficit and Fix Unemployment, Susie Madrak, Crooks and Liars
Krugman says if we don't do something about this, not only will the human costs will be high but our economic growth will be depressed for a long, long time.

Krugman: US "Depressed Economy" Could Last 5 Years, Associated Press, Huffington Post
Krugman said that while economic indicators from around the world are improving, they suggest that the pace of economic decline has only slowed.

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Not Too Big Enough

  • How the “too-big-to-fail” banks got that way, and why the current banking reform won’t solve the problem.
  • US Financial Reform Bill Misses the Mark
  • Standing Up to the Unholy Alliance Between Washington and Wall Street

Rob Larson, Dollars & Sense

The government bailout of America’s biggest banks set off a tornado of public anger and confusion. With a price tag in the trillions of dollars, rescuing the biggest American banks has left the public resentful over the bailout of banks considered “too big to fail.” But two years later, the Senate has rejected a proposal to break up today’s “megabanks” into smaller institutions, claiming that tougher reserve requirements and higher insurance premiums will prevent future large-scale bank failures.

Dealing with the collapse of these “systemically important banks” is a difficult policy issue, but the less-discussed issue is how the banking industry got to this point. If the collapse of just one of our $100 billion megabanks, Lehman Brothers, was enough to touch off an intense contraction in the supply of essential credit, we need to know how some banks became “too big to fail” in the first place. The answer lies in certain incentives for bank growth, which after the loosening of crucial industry regulations drove the enormous waves of bank mergers in the last thirty years.

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US Financial Reform Bill Misses the Mark,  Billy Wharton, Examiner.com
The new regulations will do little to curb the activities of the mega-financial institutions at the center of the economic crisis that ensued in 2008.

Standing Up to the Unholy Alliance Between Washington and Wall Street, Sen. Russ Feingold (D-WI), Huffington Post

  • Dead On Arrival: Financial Reform Fails
  • Baker Says Regulatory Overhaul Won't `Change the System'


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