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Friday, December 31, 2010

The Rich Get Richer and The Rest of Us Get Screwed.!

Here is another way in which everybody in the lowest 80% of the income group get screwed while the rich get richer, and richer, and richer. When does it end? When the country falls apart and civil war breaks out! Have you seen the riots in Greece lately? Sixty percent of the Greeks avoid paying taxes completely. How long until that happens here?

What is the solution? Do away with all income taxes and all deductions. One flat rate for everyone on all their income, plus a modest sales tax that everyone pays. Then void the ability of Goldman Sachs, et al, to hide their income offshore. (See an earlier entry.)

Right off, we save the $11 Billion we spend on the IRS. And then it just gets better.

The New York Times explains it very well.

Career Shift Often Means Drop in Living Standards

Even the lucky ones are not so lucky, it seems.

A new study of American workers displaced by the recession sheds light on the sacrifices a large number have made to find work. Many, it turns out, had to switch careers and significantly reduce their living standards.

“In many cases, these people are not very happy,” said Cliff Zukin, professor of public policy and political science at Rutgers University and one of the authors of the study. “They’re the winners who got new jobs, but they’re not really what they want, and not where they want to be.”

The study, conducted by the John J. Heldrich Center for Workforce Development at Rutgers, was based on a survey of Americans around the country who were unemployed as of August 2009 and re-interviewed about their job status twice over the next 15 months.

As of November 2010, only about one-third had found replacement jobs, either as full-time workers (26 percent) or as part-time workers not wanting a full-time job (8 percent).

And of those who successfully found work, 41 percent had switched into a new career or field.

Some of these may have been workers who retrained for new fields they wished to enter, but many seem to have taken their new jobs out of desperation. Only a minority of those displaced workers changing careers — 22 percent — said they had taken a class or a training course before finding their new job.

“Look, I am really happy to have a job — that’s the main thing,” said Sue Bires, 60, who was laid off from a job managing homeowners’ associations in Orlando, Fla., in September 2008. She initially had another job lined up with a different realty association in Orlando, but when that fell through, she moved to Austin, Tex., to stay with a friend. She filed for bankruptcy and took a job at a call center.

But she now earns $30,000, far below the $45,000 she was paid when she was managing properties.

“It’s competitive out there, even for the lower paying jobs, especially when you’re 60 looking for a job in a young town,” Ms. Bires said. “So I’m grateful to have a job where the people are nice and I have a little bit of flexibility in my hours. That’s especially important now, since retirement is looking like a long way off.”

Like Ms. Bires, most of those forced to switch careers generally seemed to downgrade their job status.

Nearly 7 in 10 of the survey’s respondents who took jobs in new fields say they had to take a cut in pay, compared with just 45 percent of workers who successfully found work in their original field.

Of all the newly re-employed tracked by the Heldrich Center, 29 percent took a reduction in fringe benefits in their new job. Again, those switching careers had to sacrifice more: Nearly half of these workers (46 percent) suffered a benefits cut, compared with just 29 percent who stayed in the same career.

Many of those who found work in a different field say they have come to terms with the limited opportunities, but they are reluctant to see their new job as a calling.

“I wouldn’t go so far as to say I’ve switched careers, since I’m not exactly sure this is a career, but I’m definitely doing something different,” said Adam Kowal, 30, of Royal Oak, Mich.

After being laid off from a job as a quality control supervisor at a department store warehouse and losing his house, he moved his family across the state to live with his mother. Unable to find similar work, he initially took a “soul-sucking” temporary job on an assembly line making auto parts, and is now working in a kitchen at a high school.

His hourly wage has fallen from $15 an hour at the warehouse to $10.50 an hour washing dishes and preparing food, and he has gone from having health insurance coverage for his whole family to no benefits. He, his pregnant wife and their 4-year-old son are now on Medicaid.

“I’d love to go back to what I was doing,” he said, or even into what he described as his true passion, full-time screenwriting. “But when I talk with the unemployment office here in Michigan, they tell me the chances of going back and using the same skill set I had before are pretty farfetched.”

Something To Think About As April 15th Rolls Around

Here is an interesting and accurate analysis from The Economic Collapse. Read it and weep!

The Shadow Banking System: A Third Of All The Wealth In The World Is Held In Offshore Banks

You and I live in a totally different world than the ultra-rich and the international banking elite do. Many of them live in a world where they simply do not pay income taxes. Today, it is estimated that a third of all the wealth in the world is held in offshore banks. So why is so much of the wealth of the globe located in places such as Monaco, the Cayman Islands, Bermuda, the Bahamas, and the Isle of Man? It isn't because those are fun places to visit. It is to avoid taxes. The super wealthy and the international banking elite think that it is really funny that our paychecks are constantly being drained by federal taxes, state taxes and Social Security taxes while they literally pay nothing at all. These incredibly rich elitists make a ton of money doing business in wealthy western nations and then they transfer virtually all of their profits offshore where they don't have to contribute any of it in taxes. It works out really great for them, but it sucks for the rest of us.

It is estimated that approximately $1.4 trillion is held in offshore banks in the Cayman Islands alone. According to an article in Forbes magazine, there is a total of approximately 15 trillion to 20 trillion dollars in offshore bank accounts, brokerage accounts and hedge fund portfolios.

A recent article in the Guardian stated that a third of all the wealth on the entire globe is held in offshore banks and that the vast majority of international banking transactions take place in these tax havens....

On a conservative estimate, a third of the world's wealth is held offshore, with 80% of international banking transactions taking place there. More than half the capital in the world's stock exchanges is "parked" offshore at some point.

All of the biggest banks in the world are involved in playing this game. All of them have big branches in these various tax havens. All of them work very hard to ensure that the tax burdens on their ultra-rich clients are as light as possible.

Nobody knows for sure how much money big governments around the globe are missing out on from all this tax avoidance, but everyone agrees the number is huge. It is at least in the hundreds of billions of dollars every single year.

It is a shadow banking system that most Americans don't know anything about. Most Americans don't have the resources to be able to set up shell companies in half a dozen different countries so that they can "filter" their profits. Most Americans don't know a thing about complicated tax avoidance plans that tax lawyers use such as the "Double Irish" and the "Dutch Sandwich". Most Americans would have no idea how to eventually have most of the money that they make end up in Bermuda so that it can avoid taxes.

No, most Americans just go to work every week and have their hard earned paychecks raped by an oppressive taxation system.

To the ultra-wealthy and the international banking system we are all just a bunch of suckers. In fact, a big portion of our taxes ends up going into their pockets to pay the interest on all of the government debt that they are holding.

When the global elite decide that they want to do some "social engineering" inside the big countries where they operate, they just set up tax-free "charitable trusts" that usually aren't very "charity-oriented" at all. Rather, many of these "charitable trusts" push the various radical political and social agendas that many of these elitists love to promote.

Examples of this include The Rockefeller Foundation and The Ford Foundation. George Soros also loves to use entities like these to push his various agendas.

The wealthy know how to play the game. For most of the rest of us, the game kicks our behinds.

So for those who are constantly screaming "tax the rich", the cold, hard truth of the matter is that those who are truly ultra-rich know how to escape just about any oppressive tax regime you may set up. They are light years ahead of the rest of us in knowing how to play the game.

What are you going to do?

Kick them out of the country?

Yeah, they will be really sad to spend even more time down in Bermuda or in the Cayman Islands.

Are you going to kick out any company that has any stock holders that have offshore bank accounts?

Well, you would have to kick out virtually every single major corporation in the United States.

This is just another example of how deeply flawed our system of income taxation really is.

Do you want to become a master of the tax code?

You might want to set aside some time for reading.

A lot of time.

The income tax code and its associated regulations contain well over 7 million words and are more than seven times longer than the Bible.

The IRS employs more than 90,000 people and it costs more than 11 billion dollars a year to operate.

Talk about a colossal waste of resources.

Meanwhile, the ultra-rich are just parking all of their money in Bermuda and the Caymans and are laughing at all the rest of us.

It would be hard to understate just how much influence and power all of this offshore money has. The ultra-wealthy and the elite international bankers own many of our largest corporations, they exert influence over central banks, they control big media outlets and they "contribute money" (bribes) to political campaigns.

The elite are always two steps ahead of any new laws that get passed. They are masters at moving money around. They will quickly find a half dozen ways around any new law that you could possibly dream up.

Most of us never even get to meet any of these incredibly wealthy individuals. They don't attend the local church or go shopping down at the local shopping mall.

No, the global elite generally live in very exclusive gated estates or hang out at the most expensive private resorts. They don't spend a lot of time mixing with the rabble.

It turns out that life is pretty good when you have a ton of money coming in and you pay next to nothing in taxes.

So the next time you get your paycheck and you see that a half a dozen things have been taken out of it, take a few moments to think of the global elite that don't pay any taxes at all and see how that makes you feel.

Hopefully when enough Americans get mad enough and start demanding change, the current income tax system will be scrapped for good and something much more equitable will be put in place instead.

Oh Boy, Here We Go!!

When I find myself agreeing with Paul Krugman completely, the world is getting ready to turn upside down!!

The New Voodoo

Hypocrisy never goes out of style, but, even so, 2010 was something special. For it was the year of budget doubletalk — the year of arsonists posing as firemen, of people railing against deficits while doing everything they could to make those deficits bigger.

And I don’t just mean politicians. Did you notice the U-turn many political commentators and other Serious People made when the Obama-McConnell tax-cut deal was announced? One day deficits were the great evil and we needed fiscal austerity now now now, never mind the state of the economy. The next day $800 billion in debt-financed tax cuts, with the prospect of more to come, was the greatest thing since sliced bread, a triumph of bipartisanship.

Still, it was the politicians — and, yes, that mainly meant Republicans — who took the lead on the hypocrisy front.

In the first half of 2010, impassioned speeches denouncing federal red ink were the G.O.P. norm. And concerns about the deficit were the stated reason for Republican opposition to extension of unemployment benefits, or for that matter any proposal to help Americans cope with economic hardship.

But the tone changed during the summer, as B-day — the day when the Bush tax breaks for the wealthy were scheduled to expire — began to approach. My nomination for headline of the year comes from the newspaper Roll Call, on July 18: “McConnell Blasts Deficit Spending, Urges Extension of Tax Cuts.”

How did Republican leaders reconcile their purported deep concern about budget deficits with their advocacy of large tax cuts? Was it that old voodoo economics — the belief, refuted by study after study, that tax cuts pay for themselves — making a comeback? No, it was something new and worse.

To be sure, there were renewed claims that tax cuts lead to higher revenue. But 2010 marked the emergence of a new, even more profound level of magical thinking: the belief that deficits created by tax cuts just don’t matter. For example, Senator Jon Kyl of Arizona — who had denounced President Obama for running deficits — declared that “you should never have to offset the cost of a deliberate decision to reduce tax rates on Americans.”

It’s an easy position to ridicule. After all, if you never have to offset the cost of tax cuts, why not just eliminate taxes altogether? But the joke’s on us because while this kind of magical thinking may not yet be the law of the land, it’s about to become part of the rules governing legislation in the House of Representatives.

As the Center on Budget and Policy Priorities points out, the incoming House majority plans to make changes in the “pay-as-you-go” rules — rules that are supposed to enforce responsible budgeting — that effectively implement Mr. Kyl’s principle. Spending increases will have to be offset, but revenue losses from tax cuts won’t. Oh, and revenue increases, even if they come from the elimination of tax loopholes, won’t count either: any spending increase must be offset by spending cuts elsewhere; it can’t be paid for with additional taxes.

So if taxes don’t matter, does the incoming majority have a realistic plan to cut spending? Of course not. Republicans say that they want to cut $100 billion in spending, which is itself small change in a $3.6 trillion federal budget. But they also say that defense, Medicare and Social Security — all the big-ticket items — are off the table. So they’re talking about a 20 percent cut in what’s left, which includes things like running the judicial system and operating the Centers for Disease Control and Prevention; they have offered no specifics about where the cuts will fall.

How will this all end? I have seen the future, and it’s on Long Island, where I grew up.

Nassau County — the part of Long Island that directly abuts New York City — is one of the wealthiest counties in America and has an unemployment rate well below the national average. So it should be weathering the economic storm better than most places.

But a year ago, in one of the first major Tea Party victories, the county elected a new executive who railed against budget deficits and promised both to cut taxes and to balance the budget. The tax cuts happened; the promised spending cuts didn’t. And now the county is in fiscal crisis.

Now the federal government has a lot more flexibility than a county government: it needn’t, and shouldn’t, balance its budget each year. The deficits of the past two years have actually been a good thing, helping to support the economy in the aftermath of the 2008 financial crisis.

But Nassau County shows how easily responsible government can collapse in this country, now that one of our major parties believes in budget magic. All it takes is disgruntled voters who don’t know what’s at stake — and we have plenty of those. Banana republic, here we come.

Thursday, December 30, 2010

Today's New York Times Pretty Well Spells It Out!!

When you read this editorial, go to the Times website ( and read the comments. Smart people make the same comment over and over again, e.g., living in this country ain't free!! And the richy richest who continually whine over their taxes should feel free to move to Somalia and pay no taxes.

Deficit Hypocrisy

It was not long ago that Republicans succeeded in holding unemployment benefits hostage to a renewal of the high-end Bush-era income tax cuts and — as a little bonus — won deep estate tax cuts for America’s wealthiest heirs. Those cuts will add nearly $140 billion to the deficit in the near term, while doing far less to prod the economy than if the money had been spent more wisely.

That should have been evidence enough that the Republican Party’s one real priority is tax cuts — despite all the talk about deficit reduction and economic growth. But here’s some more:

On Dec. 22, just before they left town for the holidays, House Republican leaders released new budget rules that they intend to adopt when they assume the majority in January and will set the stage for even more budget-busting tax cuts.

First, some background: Under pay-as-you-go rules adopted by Democratic majorities in the House and Senate in 2007, tax cuts or increases in entitlement spending must be offset by tax increases or entitlement cuts. Entitlements include big health programs like Medicare and Medicaid, for which spending is on autopilot, as well as some other programs for veterans and low-income Americans. (Discretionary spending, which includes defense, is approved separately by Congress annually.)

The new Republican rules will gut pay-as-you-go because they require offsets only for entitlement increases, not for tax cuts. In effect, the new rules will codify the Republican fantasy that tax cuts do not deepen the deficit.

It gets worse. The new rules mandate that entitlement-spending increases be offset by spending cuts only — and actually bar the House from raising taxes to pay for such spending.

Say, for example, that lawmakers want to bolster child credits for families at or near the minimum wage. One way to help pay for the aid would be to close the tax loophole that lets the nation’s wealthiest private equity partners pay tax at close to the lowest rate in the code. That long overdue reform would raise an estimated $25 billion over 10 years, but the new rules will forbid being sensible like that.

Even worse, they direct the leader of the House Budget Committee to ignore several costs when computing the budget impact of future actions, as if the costs are the natural course of politics for which no payment is required.

For example, the cost to make the Bush-era tax cuts permanent would be ignored, as would the fiscal effects of repealing the health reform law. At the same time, the new rules bar the renewal of aid for low-income working families — extended temporarily in the recent tax-cut deal — unless it is fully paid for.

House Republicans obviously believe they have a good thing going with voters by sanctifying tax cuts and demonizing spending. That’s been their approach for 30 years after all, and it unfailingly rallies their base.

The challenge for President Obama and Democratic lawmakers is not to get drawn into that warped mind-set. They need to present an alternative, including investments — in energy, technology, infrastructure and education. They also need a plan for long-term deficit reduction that recognizes what the Republicans ignore: Never-ending tax cuts make the deficit worse. Prudent tax increases need to be part of the solution.

Wednesday, December 29, 2010

Letters To The Editor, New York Times

Here are all the arguments summarized in a few letters. The rational ones, the completely irrational one and the totally confused one. And the insurance companies make end of life decisions everyday, out of sight and non-reviewable. Read on.

Making Choices for End-of-Life Care
Published: December 28, 2010

To the Editor:
Enlarge This Image
Jordan Awan

Re “Obama Institutes End-of-Life Plan That Caused Stir” (front page, Dec. 26):

The new Medicare regulation covering physicians’ discussions with their patients about end-of-life issues is once again under attack by right-wing ideologues. The new rule is specifically designed to give patients the opportunity to explain their wishes about end-of-life care to their personal physicians. It represents a thoughtful and valuable step toward allowing patients to control decisions about their own health care.

Yet Elizabeth D. Wickham of LifeTree obstinately and perversely insists, “Patients will lose the ability to control treatments at the end of life.”

This is an astonishing distortion, comparable to the canard last year that the Obama administration was planning “death panels” to decide who was worthy to receive health care.

Peter Rogatz
Port Washington, N.Y., Dec. 26, 2010

The writer is vice president of Compassion and Choices of New York, which counsels patients on end-of-life care and choices.

To the Editor:

It strikes me odd that counseling on end-of-life care (advance directives), a service that I have provided perhaps a thousand times over my 35-year medical career, is front-page news.

The plan by Medicare to reimburse for the service will not change the content of the doctor-patient discussion. Whether it changes the frequency of the discussions remains to be seen.

Charles Cutler
Norristown, Pa., Dec. 26, 2010

The writer is an internist.

To the Editor:

Those who oppose the idea of doctors discussing end-of-life treatment with their patients during routine annual checkups should consider the alternatives. Many elderly persons, and their spouses and children, are reluctant to initiate such a discussion until a medical crisis occurs, when it may be too late to have any such discussion.

These patients will be unable to consider alternative courses of treatment and make decisions for themselves, leaving their spouses and children, who have their own emotional and financial agendas, to make those decisions on their behalf.

Doctors, on the other hand, can and should initiate this difficult discussion before a crisis occurs, so that the patient can have time to consider the alternatives and make decisions for himself, rather than leaving it to his spouse or children while he lies in the intensive-care unit or nursing home bed.

Doctors, who do not have the same emotional and financial stake as family members, can outline the options in a knowledgeable and dispassionate manner, and elicit their patients’ wishes without embarrassment, tears or fears.

Joan G. Engel
West Hartford, Conn., Dec. 26, 2010

To the Editor:

I read your article about “end-of-life planning” and I am completely appalled. I have been a longtime supporter of President Obama, but it appears as if death panels are becoming a reality.

My mom, 93, recently received a diagnosis of colon cancer, and her doctors recommended an operation to remove the tumor. It was successful and she can now expect to live several more years.

Who are we, or any doctor, or any president to judge when the end of life is and when to deny aggressive care?

Laurine Laxer
Key West, Fla., Dec. 26, 2010

To the Editor:

The proposal in the health care reform legislation to encourage physicians to counsel patients and their families regarding end-of-life issues was welcomed by the vast majority of health care providers. Its exclusion from the final bill was a disservice to Americans.

Modern medicine has much to offer to critically ill patients, but too often life-supporting technologies are employed with little or no hope of recovering to a meaningful existence. Pre-emptive contemplation and advisement is essential to a person’s well-being.

Advance directives, or “living wills,” are statements made by an individual dictating his or her wishes for end-of-life treatment and offer great comfort to families who are confronted with difficult choices in a crisis.

People’s end-of-life wishes should be discussed in advance with their physician, who knows them well, rather than nervously discussed with an unfamiliar provider with whom they have no personal relationship.

David C. Goering
Lawrence, Kan., Dec. 27, 2010

The writer is a hospitalist.

To the Editor:

Those Republicans who deride the idea of voluntary end-of-life counseling ought to redirect their attention to Gov. Jan Brewer of Arizona, who signed into law a measure cutting state Medicaid financing for certain transplant operations. That’s where the real “death panel” convened.

Amy Laiken
Chicago, Dec. 26, 2010

More On Free Money

Remember the other day when I told you about getting an email from someone named Kate? She said she was promoting an online home furnishing products.

I then received an email from a reader who calls him/her self Mami2jcn who said they had done business with CSN stores and was very satisfied with the results.

"I've worked with CSN Stores before. They're legit."

O.K., that is good enough for me. Now here is what I have to do to get $30 for one of you.

Please check out the modern decor at (

Stay tuned.

Tuesday, December 28, 2010

Something Else To Think About

I suspect that the Government will inflate their way out of our financial hole because they don't have enough courage to deal with the situation as adults. However, Simon Johnson (13 Bankers, et al)comes up with a different scenario. He says the world economy will force significant tax increases on America. Since, as Yogi Berra said, "Forecasting is difficult, especially when it involves the future.", I think you should be aware of Simon's ideas.

Tax Cutters Set Up Tomorrow's Fiscal Crisis: Simon Johnson
By Simon Johnson - Dec 22, 2010
Bloomberg Opinion

President Barack Obama is receiving congratulations for moving to the center on the tax agreement with Republicans last week.

Both sides think they got something: Democrats feel this will nudge unemployment below 8.5 percent in 2012, helping the president get reelected; Republicans achieved longstanding goals on measures such as the estate tax and think they will get most of the credit for an economic recovery that’s already under way.

The truth is, the deal moved us closer to a fiscal crisis, just as the euro zone now is experiencing.

Who will emerge on top in the U.S. version is harder to predict; at the moment, Republicans have the edge. But it’s not clear even they will be happy with what they wished for -- an opportunity to enact massive federal government spending cuts.

The central conceit behind official thinking about fiscal policy on both sides of the aisle is that investors will buy almost all U.S. government debt without blinking an eye or increasing Treasury yields. This is an endearing and heart- warming notion, rather like a seasonal showing of Jimmy Stewart in “It’s a Wonderful Life.”

What it should do is force us to think about how much the world has changed and how antiquated such ideas are today.

The U.S. is steadily losing its global economic and financial predominance. To be sure, we offer the largest amount of government debt on the market, but investors have plenty of choices around the world, both in terms of debt and other assets. The idea that our Treasury market will be buoyed by captive investors, whether the Chinese central bank or anyone else, is quaint and at odds with today’s reality.

Debt Dream

Remember that we run a large current account deficit, so we need to take in new foreign capital every day just to maintain our lifestyle. So this isn’t just about foreigners refusing to understand the American debt dream.

It’s true that the euro zone has had a rocky ride in recent months and we shouldn’t expect those countries to sort out their problems soon. Another round of serious euro sovereign debt issues is likely as we head into the spring.

But the euro leadership will sort itself out; there is too much on the line. A stronger and more Germanic core of the euro zone will establish its fiscal credibility and its resilience.

The key to debt sustainability isn’t how much revenue the government can raise relative to gross domestic product or some other economic characteristic. It’s whether a country has the political will to raise taxes or cut spending when under pressure from the financial markets.

This is where Greece and Ireland were found wanting in 2010; we’ll see how Portugal, Spain, Italy, Belgium and perhaps even France do in 2011. Then it will be the U.S.’s turn.

It’s Easy

The issue isn’t whether we can muster a bipartisan consensus to cut taxes; this is easy to do. But can our politicians agree on what to do when 10-year Treasury yields surge, interest payments soar and there are concerns about the rollover of our relatively short-term government debt?

One response is: The Federal Reserve won’t let this happen and will use another round of quantitative easing or some other innovation to hold down long rates. Maybe so, but 10-year benchmark rates have spiked in the past month or so, and mortgage rates -- presumed to be the Fed’s target -- have gained more than half a percentage point from recent lows.

Some people, like my colleague Joseph Gagnon at the Peterson Institute for International Economics, think this reflects the success of the current round of quantitative easing. Others feel that it shows global sentiment already turning against U.S. fiscal policy. Either way, it suggests the U.S. has only a limited ability to finance its growing debt at very low interest rates.

Three Developments

When this kind of fiscal pressure builds, we typically see three developments.

First, there is a fuller accounting of off-balance-sheet and contingent liabilities. We will hear a great deal about what the U.S. government really owes over the next 10 or 20 years in terms of its support for everything from public pensions to banks that are too big to fail.

Second, a state or other entity will get into serious trouble and threaten to default, creating a potential Lehman- type moment. The question is, just how much is the federal government on the hook?

Third, expectations become self-fulfilling. As interest rates rise, fiscal policy makers flounder. Unlike weaker European countries, the U.S. can’t use an outside fiscal authority to break this kind of spiral. Even China, holding perhaps around $2.6 trillion dollars, doesn’t have enough financial firepower to make a difference -- and remember that most of its assets are in the very U.S. Treasury securities that will be under pressure.

Two Choices

At this point, we will have only two choices: Raise taxes or cut spending. Given that the Obama administration is unprepared for this scenario, and has no sensible tax-reform plans under way, this gives an opportunity to Republicans intent on big spending cuts. For anyone hoping to “starve the beast,” this will be a historic opportunity.

But there’s a problem. The U.S. government doesn’t take in much tax revenue -- at least 10 percentage points of GDP less than comparable developed economies -- and it also doesn’t spend much except on the military, Social Security and Medicare. Other parts of government spending can be frozen or even slashed, but it just won’t make that much difference.

That means older Americans are going to get squeezed, while our ability to defend ourselves goes into decline. Just because there’s a bipartisan consensus on an idea, such as tax cuts, doesn’t mean it makes sense. Today’s tax cutters have set us up for tomorrow’s fiscal crisis and real damage to U.S. national security.

(Simon Johnson, co-author of “13 Bankers: The Wall Street Takeover and the Next Financial Meltdown,” is a professor at MIT’s Sloan School of Management and a Bloomberg News columnist. The opinions expressed are his own.)

Sunday, December 26, 2010

This is Exactly Why Larry Lessig Wants to Limit Campaign Contributions!!

Lawmakers seek cash during key votes

By Carol D. Leonnig and T.W. Farnam
Washington Post Staff Writers
Sunday, December 26, 2010; 12:00 AM

Numerous times this year, members of Congress have held fundraisers and collected big checks while they are taking critical steps to write new laws, despite warnings that such actions could create ethics problems. The campaign donations often came from contributors with major stakes riding on the lawmakers' actions.

For three weeks in June, for instance, the members of a joint House and Senate committee worked to draft final rules for regulating the financial industry in the wake of its 2008 meltdown. During that time, the 35 members of the drafting committee collected $440,000 in donations from that same industry, which was then lobbying heavily for looser rules.

Earlier this month, the chairman of the Senate committee overseeing tax policy, Sen. Max Baucus (D-Mont.), gave himself a birthday-party fundraiser - on the same day that the chamber took its first vote on an $858 billion tax package that would provide breaks to wealthy citizens and business interests.

Members of Congress contacted for this article declined to answer questions about ethics rules and the possible appearance of impropriety. Instead, they stressed that their votes can't be bought.

"Money has no influence on how Senator Baucus makes his decisions," Baucus spokeswoman Kate Downen said. "The only factor that determines Senator Baucus's votes is whether a policy is right for Montana and right for our country."

But ethics watchdogs complain that, in a race for money to help them win reelection, lawmakers routinely ignore congressional ethics rules that urge them to avoid fundraising around the same time that they are making key lawmaking decisions. The rules say that such sensitive timing could give the appearance that donors are improperly influencing decisions.

The Washington Post found that the pattern of crunch-time fundraising has continued this year, even after a congressional investigative office warned this summer that it could violate ethics rules. The Post analysis - using data from two nonprofit organizations, the Center for Responsive Politics and the Sunlight Foundation - scrutinized lawmakers involved in pushing key legislation and donations made to them by interested parties.

"Citizens generally feel this kind of thing falls between the bookends of 'icky' and 'bribery,' " said David Levinthal, a spokesman for the Center for Responsive Politics, which charts campaign donations and special interest influence. "It makes people wonder: Is the donor making the donation because they are trying to get a particular legislative action? Or is the member soliciting the donation because they feel they have a whole bunch of special interests over a barrel at that moment and can profit from that?"

Members of Congress say that donations close to key votes are often coincidental. Some argue that because legislative action and fundraising happen all the time on Capitol Hill, it is impossible to know when the two are connected.

Ethics watchdogs say that instead of protesting their innocence, members should write clearer rules, disclose all fundraisers or both, in order to address public concern that monied donors are able to buy access at critical stages in lawmaking.

"What this reveals is just how much this is general operating procedure on Capitol Hill, raising money around key legislative decisions," said Nancy Watzman, who oversees analysis of political fundraisers for the Sunlight Foundation, which advocates for government transparency. "This hits right to the core of how lawmakers get and keep their jobs. And they complain when you show the public how it works."
A test case

The issue of the timing of donations came up this summer when reports surfaced that eight members were under investigation by the independent Office of Congressional Ethics. They had solicited hundreds of thousands of dollars in donations from financial firms just before a critical House vote last December on new regulations for Wall Street. The ethics office was looking at whether they should have avoided those donations because of the potential for or appearance of impropriety.

Three cases, involving Reps. John Campbell (R-Calif.), Tom Price (R-Ga.) and Joseph Crowley (D-N.Y.), were referred to the House ethics committee, which last week asked for more time to investigate. All three have said that they complied with House ethics rules.

But just as the public learned of the ethics office's probe in June, a conference committee of House members and senators met to draft a compromise bill on landmark Wall Street reform. The measure would force firms to follow new rules for previously secret and risky transactions that were blamed for the 2008 market meltdown. Over the course of three weeks in June, the 35 conference committee members collected $440,000 in donations from the financial industry. Sen. Charles E. Schumer (D-N.Y.), a member of the Senate banking committee and a powerful conferee, collected the most that month - about $90,000 from financial interests.

Executives of accounting giant Ernst & Young contributed the lion's share of that amount for Schumer: $49,000 in all of June, including $2,000 from chief executive James Turley. Ernst & Young works for some of the biggest firms on Wall Street. This week, New York state sued the company, accusing it of using a paperwork shuffle to help Lehman Brothers hide billions of dollars in debt before that firm's 2008 collapse.

Schumer's staff declined to discuss the ethics rules' advice on forgoing some donations, but said the timing is not relevant.

"During this period, Senator Schumer was actively fighting for some of the proposals most opposed by the banking industry, including a strong consumer watchdog agency and greater oversight on derivatives," spokesman Brian Fallon said.

Conference members also were busy on the party circuit that month. There were 54 fundraisers held to benefit the reelection campaigns of committee members, or featuring one of those members as a VIP guest.

Rep. Barney Frank (D-Mass.) was mentioned as the VIP guest for a Florida lawmaker's fundraiser 48 hours before the committee officially began work. The party host was DLA Piper, a law firm registered to lobby on the bill for several financial clients, including Discover Financial Services, Experian and Charles Schwab. Frank's committee office did not respond to a request for comment, but Frank has previously said that he follows all ethics rules carefully.
Business generosity

In September, the Senate voted on what it considered one of the year's most important pieces of legislation, the Small Business Job Creation Act. The bill, which later became law, created a $30 billion loan fund for community banks and gave them incentives to lend the money to small businesses. Hundreds of lobbyists were registered to lobby on this legislation, in part because it meant more business for banks.

Senators collected $469,000 from the financial industry the day before, the day of and the day after that key Sept. 16 vote, a Post review of donations shows. The biggest recipient was Senate Majority Leader Harry M. Reid (D-Nev.), who shepherded the legislation and faced a tight reelection race.

Reid spokesman Zac Petkanas said the timing was not of Reid's making. The vote was supposed to come months earlier but was delayed by Republican obstruction, Petkanas said.

"Senator Reid's sole consideration on any piece of legislation is always how it will benefit Nevada's families and small businesses," Petkanas said. "He will not apologize for working for months to pass the Small Business Job Creation Act, which is now helping Nevada small businesses during these difficult economic times by opening up otherwise unavailable lines of credit to help them grow, strengthen our economy and put people back to work."
Birthday surprise

Early this month, when Baucus held his birthday fundraiser, Democrats that same day sent to the floor a $858 billion tax cut package. The bill, which has since become law, extends tax cuts passed during George W. Bush's presidency, but also provides huge breaks for wealthy Americans and niche business interests. The invitation to Baucus's event solicited money from lobbyists and executives with major stakes in the package.

Baucus's office said that the bill that passed was not his and that his fundraiser - which included an event for donors of at least $5,000, held at a location that was not made public - was scheduled months before the legislation went to the floor.

Research editor Alice Crites and staff writer Paul Kane contributed to this report.

New York Times review of Griftopia

You have read my review of Matt's book. Here is the New York Time's review and I agree completely with it.

Thieves’ Paradise


Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America

By Matt Taibbi

252 pp. Spiegel & Grau. $26.

Among the unfortunate legacies of the financial crisis of 2008 is a tendency among commentators to soft-pedal the outrage over what happened. In too many accounts, blame is considered impossible to assign given the complexities of modern-day finance. Those inclined to point fingers at Wall Street or Washington are frequently derided as innocents who do not grasp how the world really works.

The result is an apologia that goes something like this: Mistakes were made, despite the best intentions of financial professionals. Bankers lent too much money to poor people who never should have bought homes. Models used to measure risk broke down, and regulators were swamped. All of this was a shame, but accidents are a part of life, and an unavoidable part of the swashbuckling style of capitalism that has enriched Americans for generations.

Nonsense, Matt Taibbi says. In “Griftopia,” a relentlessly disturbing, penetrating exploration of the root causes of the trauma that upended economic security in millions of American homes, Taibbi argues that what unfolded was far from accidental. Rather, the nation suffered the equivalent of a hostile takeover of key areas of its commercial life by investment banking houses, while regulators and members of Congress abdicated their responsibilities either because they were influenced by campaign cash or because they believed the fairy tale that unsupervised markets always work best. The result, Taibbi asserts, was a thieves’ paradise — Griftopia.

A contributing editor for Rolling Stone magazine, Taibbi is best known for the metaphor he hurled like a grenade at the Wall Street goliath Goldman Sachs, calling it “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” He amplifies that characterization here, pointing out that Goldman managed to collect billions of dollars in taxpayer bailout funds that were paid to American International Group (A.I.G.).

Taibbi persuasively dismisses the argument that the financial crisis was caused by poor people with a taste for real estate, delineating how Wall Street eagerly handed out mortgages to anyone with a pulse, and then used the home loans as the material for a far more lucrative enterprise — the exotic investments known as derivatives. The derivatives market depended upon a steady supply of mortgages. But when too many of the bets went bad, Wall Street persuaded the Treasury to construct bailouts that Taibbi describes as a “labyrinthine financial sewage system designed to stick us all with the raw waste and pump clean water back to Wall Street.”

Much of this story is familiar. The shelves are full of books describing how Wall Street turned mortgage markets into a casino. Goldman’s dealings with A.I.G. have been probed in the pages of this newspaper, among others. What Taibbi brings is a broader context and his trademark snarky prose. He has written a polemic, a full-scale indictment of Wall Street and Washington, one that sometimes veers toward ranting, yet serves as a needed antidote to the more even-tempered but fatuous accounts already available.

In Taibbi’s telling, contemporary finance has perverted markets that once served important functions, turning them into frontier-style betting parlors. Futures markets, for example, were created to allow farmers to hedge themselves against fluctuations in crop prices, and were traditionally regulated to prevent investors from amassing holdings large enough to manipulate prices. But over the last two decades, the federal government, at Wall Street’s behest, pared down its rules, allowing speculators to dominate commodities markets. Wall Street then steered pension funds into commodities. This, Taibbi claims, was the real cause of the commodities bubble that sent oil prices soaring to ludicrous heights in the summer of 2008. And now, with many local authorities hurting for cash, Wall Street is increasingly brokering deals that turn municipal facilities like Chicago’s parking meters into investment vehicles controlled by overseas governments — deals that Taibbi presents as a taxpayer rip-off.

Some of this analysis is overheated. Taibbi portrays the sale of infrastructure to overseas buyers as nefarious on its face, without adequately explaining the supposed evils. He accepts the depiction of the Obama health care reform as “a new law that will radically remake the ­faces of both the federal government and the private economy, and also ratify the worst paranoid fears of both ends of the political spectrum.” Never mind that much of the health-care sector was already in government hands through Medicare and Medicaid. But he rightly decries the crudity of the deal through which private insurers were supplied new customers at ­government-protected prices.

Taibbi is a skilled and often entertaining writer. He is determined to help the reader make sense of complex issues that frequently cloak political and economic power, and he adroitly demystifies much of the jargon that lards financial writing. But he is too enamored of his own style. His prose wrestles for attention with the story itself, and his predilection for shock imagery and profanity tends to undermine the points he is trying to make. The vampire squid metaphor was deadly, yet Taibbi can’t resist trying to duplicate that feat on just about every other page, as if laboring to justify his perch at the same magazine that once employed Hunter S. Thompson.

Words and phrases like “bloviating,” “utterly insane” and “moron” all get vigorous workouts. Taibbi refers to A.I.G.’s “impending ratings holocaust.” And not content to excoriate the former Federal Reserve chairman Alan Greenspan for his near-cultish reverence for unsupervised markets, Taibbi calls him a liar, adding that he “castrated the government as a regulatory authority, then transformed himself into the Pablo Escobar of high finance, unleashing a steady river of cheap weight into the crack house that Wall Street was rapidly becoming.” Mixed metaphors aside, this sort of hyperventilation makes Taibbi’s legitimate accusations seem flimsy, as if the facts alone were not sufficient cause for consternation.

Taibbi reprints his now-famous vampire squid article as the book’s final chapter (with updating), and then tacks on a tedious recounting of how other journalists unfairly attacked him. This score-settling comes off as sophomoric and trifling.

Still, Taibbi has written a necessary and engaging corrective to the noxious idea that the tragedy of recent years was an inevitable byproduct of the market system. What’s more, he concludes with a grim warning.

The villains of the last crisis, he observes, are the same people now tasked with preventing the next one.“We live in an economy that is immensely complex, and we are completely at the mercy of the small group of people who understand it — who incidentally often happen to be the same people who built these wildly complex economic systems,” he writes. “We have to trust these people to do the right thing, but we can’t, because, well, they’re scum. Which is kind of a big problem, when you think about it.”

Peter S. Goodman is the business editor of The Huffington Post and the author of “Past Due: The End of Easy Money and the Renewal of the American Economy.”

One More Act of Political Cowardice

Anyone who has studied the finances of the U.S. seriously knows that the number one out of control expense is health care. Health care costs are a serious problem for two reasons; 1)We spend 16-18% of our total income (GNP) on health care, and that is twice as much as any other developed country, but we don't get the results that other developed countries get for their expenditure. For instance, infant mortality in the U.S. ranks right up there with third world countries. 2)Health care costs are increasing 8%-10% a year so that 30% of the GNP is within sight. That means money that we could spend on education, infrastructure, etc. will be spent on health care.

So controlling and reducing health care costs while providing health care coverage for all Americans is the number #1 job facing the U.S. government, without question. That is why Obamacare is an absolute failure as a piece of legislation because it does absolutely nothing to reduce health care costs. In fact, the one small step toward controlling costs, e.g., the cross comparison of the effectiveness and costs of varying medical procedures, was specifically prohibited by Congress from being used by Medicare. Outrageous!!

In The Great Recession Conspiracy, we point out that 60%,70%,80% of TOTAL health care costs in the U.S. are spent in the last two months, weeks, days of life. The differences in details come from different researchers measuring different things. But the results are absolutely clear. We have an enormous amount of extremely high tech and extremely expensive hardware to keep people alive without any improvement in the quality of heir lives.

I have watched his play out with my own father. He had been totally senile for at least five years before he died. He didn't know who he was, where he was, or who anybody else was for years. He had had a series of strokes already, but as the end approached, my sister and brother wanted everything possible done to prolong his "life".

Now here is the really big payoff to the medicare cost problem. We can reduce end of life expenditures by giving the person a hand in making that final decision before they become incapacitated. That means encouraging people to have living wills and do not resuscitate (DNR)orders completed well before they are needed. By comparison, such costs would be minuscule. There could even be standardized forms you could down load from a Government website and fill out yourself. We also need to allow Medicare to pay for the time doctors and counselors spend discussing the end of live issues with patients and relatives.

Now what happened two years ago was that the original Obamacare bill contained a small provision for exactly such payments. When the Wicked Witch of the North found that section she started screaming about "Death Panels". That woman is so stupid she doesn't understand that health care is rationed in the U.S. and it is rationed by anonymous, faceless clerks working for insurance companies. Awhile back we told about the little girl who needed a kidney transplant but was denied by her insurance company when she applied. Her parents applied a second time and was granted permission. But, sad to say, the little girl died before the authorization arrived. (If the Wicked Witch actually knows these facts, she is incredibly cynical and manipulative.)

Obama's response to the Wicked Witch was not to use the facts to tear apart her claims, but to mutter about not pulling the switch on granny. A pathetic response!

This week it turns out that Obama is going to try to get the payment for consulting into force with an executive order. And this is the part that will blow your mind! They are trying to keep it secret so the Wicked Witch of the North won't find out about it!! Good Grief!! Keep it a secret!! Do it in the public but keep it a secret?? Is there anybody in the Obama administration who has any concept of reality whatsoever?

So Obama was unwilling to confront the Wicked Witch with facts, but he is willing to try to sneak in the right stuff. Cowardly Lion, indeed.

Here is the New York Times story today. Decide for yourself.

Obama Returns to End-of-Life Plan That Caused Stir

WASHINGTON — When a proposal to encourage end-of-life planning touched off a political storm over “death panels,” Democrats dropped it from legislation to overhaul the health care system. But the Obama administration will achieve the same goal by regulation, starting Jan. 1.

Under the new policy, outlined in a Medicare regulation, the government will pay doctors who advise patients on options for end-of-life care, which may include advance directives to forgo aggressive life-sustaining treatment.

Congressional supporters of the new policy, though pleased, have kept quiet. They fear provoking another furor like the one in 2009 when Republicans seized on the idea of end-of-life counseling to argue that the Democrats’ bill would allow the government to cut off care for the critically ill.

The final version of the health care legislation, signed into law by President Obama in March, authorized Medicare coverage of yearly physical examinations, or wellness visits. The new rule says Medicare will cover “voluntary advance care planning,” to discuss end-of-life treatment, as part of the annual visit.

Under the rule, doctors can provide information to patients on how to prepare an “advance directive,” stating how aggressively they wish to be treated if they are so sick that they cannot make health care decisions for themselves.

While the new law does not mention advance care planning, the Obama administration has been able to achieve its policy goal through the regulation-writing process, a strategy that could become more prevalent in the next two years as the president deals with a strengthened Republican opposition in Congress.

In this case, the administration said research had shown the value of end-of-life planning.

“Advance care planning improves end-of-life care and patient and family satisfaction and reduces stress, anxiety and depression in surviving relatives,” the administration said in the preamble to the Medicare regulation, quoting research published this year in the British Medical Journal.

The administration also cited research by Dr. Stacy M. Fischer, an assistant professor at the University of Colorado School of Medicine, who found that “end-of-life discussions between doctor and patient help ensure that one gets the care one wants.” In this sense, Dr. Fischer said, such consultations “protect patient autonomy.”

Opponents said the Obama administration was bringing back a procedure that could be used to justify the premature withdrawal of life-sustaining treatment from people with severe illnesses and disabilities.

Section 1233 of the bill passed by the House in November 2009 — but not included in the final legislation — allowed Medicare to pay for consultations about advance care planning every five years. In contrast, the new rule allows annual discussions as part of the wellness visit.

Elizabeth D. Wickham, executive director of LifeTree, which describes itself as “a pro-life Christian educational ministry,” said she was concerned that end-of-life counseling would encourage patients to forgo or curtail care, thus hastening death.

“The infamous Section 1233 is still alive and kicking,” Ms. Wickham said. “Patients will lose the ability to control treatments at the end of life.”

Several Democratic members of Congress, led by Representative Earl Blumenauer of Oregon and Senator John D. Rockefeller IV of West Virginia, had urged the administration to cover end-of-life planning as a service offered under the Medicare wellness benefit. A national organization of hospice care providers made the same recommendation.

Mr. Blumenauer, the author of the original end-of-life proposal, praised the rule as “a step in the right direction.”

“It will give people more control over the care they receive,” Mr. Blumenauer said in an interview. “It means that doctors and patients can have these conversations in the normal course of business, as part of our health care routine, not as something put off until we are forced to do it.”

After learning of the administration’s decision, Mr. Blumenauer’s office celebrated “a quiet victory,” but urged supporters not to crow about it.

“While we are very happy with the result, we won’t be shouting it from the rooftops because we aren’t out of the woods yet,” Mr. Blumenauer’s office said in an e-mail in early November to people working with him on the issue. “This regulation could be modified or reversed, especially if Republican leaders try to use this small provision to perpetuate the ‘death panel’ myth.”

Moreover, the e-mail said: “We would ask that you not broadcast this accomplishment out to any of your lists, even if they are ‘supporters’ — e-mails can too easily be forwarded.”

The e-mail continued: “Thus far, it seems that no press or blogs have discovered it, but we will be keeping a close watch and may be calling on you if we need a rapid, targeted response. The longer this goes unnoticed, the better our chances of keeping it.”

In the interview, Mr. Blumenauer said, “Lies can go viral if people use them for political purposes.”

The proposal for Medicare coverage of advance care planning was omitted from the final health care bill because of the uproar over unsubstantiated claims that it would encourage euthanasia.

Sarah Palin, the 2008 Republican vice-presidential candidate, and Representative John A. Boehner of Ohio, the House Republican leader, led the criticism in the summer of 2009. Ms. Palin said “Obama’s death panel” would decide who was worthy of health care. Mr. Boehner, who is in line to become speaker, said, “This provision may start us down a treacherous path toward government-encouraged euthanasia.” Forced onto the defensive, Mr. Obama said that nothing in the bill would “pull the plug on grandma.”

A recent poll by the Kaiser Family Foundation suggests that the idea of death panels persists. In the September poll, 30 percent of Americans 65 and older said the new health care law allowed a government panel to make decisions about end-of-life care for people on Medicare. The law has no such provision.

The new policy is included in a huge Medicare regulation setting payment rates for thousands of services including arthroscopy, mastectomy and X-rays.

The rule was issued by Dr. Donald M. Berwick, administrator of the Centers for Medicare and Medicaid Services and a longtime advocate for better end-of-life care.

“Using unwanted procedures in terminal illness is a form of assault,” Dr. Berwick has said. “In economic terms, it is waste. Several techniques, including advance directives and involvement of patients and families in decision-making, have been shown to reduce inappropriate care at the end of life, leading to both lower cost and more humane care.”

Ellen B. Griffith, a spokeswoman for the Medicare agency, said, “The final health care reform law has no provision for voluntary advance care planning.” But Ms. Griffith added, under the new rule, such planning “may be included as an element in both the first and subsequent annual wellness visits, providing an opportunity to periodically review and update the beneficiary’s wishes and preferences for his or her medical care.”

Mr. Blumenauer and Mr. Rockefeller said that advance directives would help doctors and nurses provide care in keeping with patients’ wishes.

“Early advance care planning is important because a person’s ability to make decisions may diminish over time, and he or she may suddenly lose the capability to participate in health care decisions,” the lawmakers said in a letter to Dr. Berwick in August.

In a recent study of 3,700 people near the end of life, Dr. Maria J. Silveira of the University of Michigan found that many had “treatable, life-threatening conditions” but lacked decision-making capacity in their final days. With the new Medicare coverage, doctors can learn a patient’s wishes before a crisis occurs.

For example, Dr. Silveira said, she might ask a person with heart disease, “If you have another heart attack and your heart stops beating, would you want us to try to restart it?” A patient dying of emphysema might be asked, “Do you want to go on a breathing machine for the rest of your life?” And, she said, a patient with incurable cancer might be asked, “When the time comes, do you want us to use technology to try and delay your death?”

Another voice (s)

On a number of occasions, we have lamented the widening gap between the absolutely richest Americans and the rest of us. The point is that the greatest threat to this country is the way the richest Americans manipulate the economy to their own benefit and to the detriment of the rest of us.

In today's New York Times, Frank Rich uses florid writing and a particularly interesting structure to tell this story in his own way. His article is reproduced below. After you have read it, go to and read some of the Comments on Frank's column to get the flavor of what a wide collection of Americans think about the condition of the country and where we are headed. You will find the Comments as interesting as the article.

Who Killed the Disneyland Dream?

OF the many notable Americans we lost in 2010, three leap out as paragons of a certain optimistic American spirit that we also seemed to lose this year. Two you know: Theodore Sorensen, the speechwriter present at the creation of J.F.K.’s clarion call to “ask what you can do for your country,” and Richard Holbrooke, the diplomat who brought peace to the killing fields of Bosnia in the 1990s. Holbrooke, who was my friend, came of age in the Kennedy years and exemplified its can-do idealism. He gave his life to the proposition that there was nothing an American couldn’t accomplish if he marshaled his energy and talents. His premature death — while heroically bearing the crushing burdens of Afghanistan and Pakistan — is tragic in more ways than many Americans yet realize.

But a third representative American optimist who died this year, at age 91, is a Connecticut man who was not a player in great events and whom I’d never heard of until I read his Times obituary: Robbins Barstow, an amateur filmmaker who for decades recorded his family’s doings in home movies of such novelty and quality that one of them, the 30-minute “Disneyland Dream,” was admitted to the National Film Registry of the Library of Congress two years ago. That rare honor elevates Barstow’s filmmaking to a pantheon otherwise restricted mostly to Hollywood classics, from “Citizen Kane” to “Star Wars.”

“Disneyland Dream” was made in the summer of 1956, shortly before the dawn of the Kennedy era. You can watch it on line at or on YouTube. Its narrative is simple. The young Barstow family of Wethersfield, Conn. — Robbins; his wife, Meg; and their three children aged 4 to 11 — enter a nationwide contest to win a free trip to Disneyland, then just a year old. The contest was sponsored by 3M, which asked contestants to submit imaginative encomiums to the wonders of its signature product. Danny, the 4-year-old, comes up with the winning testimonial, emblazoned on poster board: “I like ‘Scotch’ brand cellophane tape because when some things tear then I can just use it.”

Soon enough, the entire neighborhood is cheering the Barstows as they embark on their first visit to the golden land of Anaheim, Calif. As narrated by Robbins Barstow (he added his voiceover soundtrack to the silent Kodachrome film in 1995), every aspect of this pilgrimage is a joy, from the “giant TWA Super Constellation” propeller plane (seating 64) that crosses the country in a single day (with a refueling stop in St. Louis) to the home-made Davy Crockett jackets the family wears en route.

To watch “Disneyland Dream” now as a boomer inevitably sets off pangs of longing for a vanished childhood fantasyland: not just Walt Disney’s then-novel theme park but all the sunny idylls of 1950s pop culture. As it happens, Disney’s Davy Crockett, the actor Fess Parker, also died this year. So did Barbara Billingsley, matriarch of the sitcom “Leave It to Beaver,” whose fictional family, the Cleavers, first appeared in 1957 and could have lived next door to the Barstows. But the real power of this film is more subtle and pertinent than nostalgia.

When the Barstows finally arrive at the gates of Disneyland itself and enter its replica of Main Street, U.S.A. — “reconstructed as it might have been half a century earlier,” as the narration says — we realize that the America of “Disneyland Dream” is as many years distant from us as that picture-postcard Main Street was from this Connecticut family. The almost laughably low-tech primitivism of the original Disneyland, the futuristic Tomorrowland included, looks as antique in 2010 as Main Street’s horse-drawn buggies and penny-candy emporium looked to the Barstows.

Many of America’s more sweeping changes since 1956 are for the better. You can’t spot a nonwhite face among the family’s neighbors back home or at Disneyland. Indeed, according to Neal Gabler’s epic biography of Disney, civil rights activists were still pressuring the park to hire black employees as late as 1963, the same year that Martin Luther King Jr.’s march on Washington and Betty Friedan’s “Feminine Mystique” started upending the Wonder Bread homogeneity that suffuses the America of “Disneyland Dream.”

But, for all those inequities, economic equality seemed within reach in 1956, at least for the vast middle class. (Michael Harrington’s exposé of American poverty, “The Other America,” would not rock this complacency until 1962.) The sense that the American promise of social and economic mobility was attainable to anyone who sought it permeates “Disneyland Dream” from start to finish.

The Barstows exemplified that postwar middle class. Robbins Barstow’s day job was as a director of professional development for a state teachers’ union. His family wanted for nothing, but finances were tight. Once in California they cheerfully stretch their limited expense money ($300 for the week) by favoring picnics over restaurants. As they dive into the pool at the old Huntington Sheraton, the grand Pasadena hotel where they’re bivouacked, they marvel at its reminders of “bygone days of more leisurely and gentle upper-class style and elegance.”

The key word in that sentence is “bygone.” The Barstows accept as a birthright an egalitarian American capitalism where everyone has a crack at “upper class” luxury if they strive for it (or are clever enough to win it). It’s an America where great corporations like 3M can be counted upon to make innovative products, sustain an American work force, and reward their customers with a Cracker Jack prize now and then. The Barstows are delighted to discover that the restrooms in Fantasyland are marked “Prince” and “Princess.” In America, anyone can be royalty, even in the john.

“Disneyland Dream” is an irony-free zone. “For our particular family at that particular time, we agreed with Walt Disney that this was the happiest place on earth,” Barstow concludes at the film’s end, from his vantage point of 1995. He sees himself as part of “one of the most fortunate families in the world to have this marvelous dream actually come true” and is “forever grateful to Scotch brand cellophane tape for making all this possible for us.”

Only 15 months after the Barstows returned home, America’s faith in its own unbounded future, so palpable in “Disneyland Dream,” would be shaken by the Soviet launch of Sputnik, the first Earth-orbiting satellite. Could it be that America, for all its might, entrepreneurship and brainpower, was falling behind its cold war antagonist in the race to the future? It was in that shadow that John F. Kennedy promised a New Frontier that would reclaim America’s heroic destiny, and do so with shared sacrifice and a renewed commitment to the lower-case democratic values central to both the American and Disneyland dreams of families like the Barstows.

This month our own neo-Kennedy president — handed the torch by J.F.K.’s last brother and soon to face the first Congress without a Kennedy since 1947 — identified a new “Sputnik moment” for America. This time the jolt was provided by the mediocre performance of American high school students, who underperformed not just the Chinese but dozens of other countries in standardized tests of science, math and reading. In his speech on the subject, President Obama called for more spending on research and infrastructure, more educational reform and more clean energy technology. (All while reducing the deficit, mind you.) Worthy goals, but if you watch “Disneyland Dream,” you realize something more fundamental is missing from America now: the bedrock faith in the American way that J.F.K. could tap into during his era’s Sputnik moment.

How many middle-class Americans now believe that the sky is the limit if they work hard enough? How many trust capitalism to give them a fair shake? Middle-class income started to flatten in the 1970s and has stagnated ever since. While 3M has continued to prosper, many other companies that actually make things (and at times innovative things) have been devalued, looted or destroyed by a financial industry whose biggest innovation in 20 years, in the verdict of the former Fed chairman Paul Volcker, has been the cash machine.

It’s a measure of how rapidly our economic order has shifted that nearly a quarter of the 400 wealthiest people in America on this year’s Forbes list make their fortunes from financial services, more than three times as many as in the first Forbes 400 in 1982. Many of America’s best young minds now invent derivatives, not Disneylands, because that’s where the action has been, and still is, two years after the crash. In 2010, our system incentivizes high-stakes gambling — “this business of securitizing things that didn’t even exist in the first place,” as Calvin Trillin memorably wrote last year — rather than the rebooting and rebuilding of America.

In last week’s exultant preholiday press conference, Obama called for a “thriving, booming middle class, where everybody’s got a shot at the American dream.” But it will take much more than rhetorical Scotch tape to bring that back. The Barstows of 1956 could not have fathomed the outrageous gap between this country’s upper class and the rest of us. America can’t move forward until we once again believe, as they did, that everyone can enter Frontierland if they try hard enough, and that no one will be denied a dream because a private party has rented out Tomorrowland.

Friday, December 24, 2010

Ben Bernake Flunks Econ 101 AND Physics 101

Here are two numbers to pay attention to, the amount of U.S. currency in circulation.

2008; $875,000,000,000 ($875 Billion)
2010; $1,996,054,000,000 ($1.2 Trillion)

That is an increase in the money supply of 228%.

During that same period, the GNP (the value of all the goods and services created in the U.S.has grown 3%-4%.

So we now have a HUGE increase in the amount of money in circulation and a TINY increase in the amount of goods and services on which to spend that money.

The Econ 101 definition of INFLATION is too much money chasing too few goods. It is also the Physics 101 definition of the behavior of any two quantities.

What is there about this fact of life that the Administration cannot understand?

And the answer from the administration since Hank Paulson used your money to bail out his pals at Goldman Sachs has been the same every time, e.g., Things would have been truly terrible if we hadn't taken this action."

How do you answer this kind of quackery?

Thursday, December 23, 2010

A Thought at Christmas Time

Tomorrow is Christmas Eve, and I hope that you and all of yours are warm, dry and well fed. The Cowardly Lion is vacationing in Hawaii. As we lived in Kauai for a number of Christmases, I can tell you that Christmas in Hawaii is very nice, a little different, but nice. I am sure that the whole family will enjoy their time in Honolulu and environs.

But here is the bad news. As we settle down to enjoy this time of year, there are a lot of other Americans who are not having such a good time. Business Week came this week with these numbers; 15 Million Americans are unemployed, 1.3 Million have given up looking for work because they don't think they can find any, 1.2 Million have given up looking for work for other reasons, and another 9 Million are only working part time because that is the best job they can find.

That is a total of 26,600,000 Americans who will not be having the same Christmas we are having. For this to happen in the richest country in the world is a travesty and a huge failure of leadership!

But it gets worse! 41.9% of the unemployed have been out of work for over 27 weeks. That is over SIX months! And many of them are 99ers, meaning they have been out of work for over 99 months, i.e., TWO YEARS.

Think about trying to support a family of four on $300, or so, a week! I doubt there is much joy in this families. And even that will end for the 99ers very shortly.

So here is the Christmas equation. $800 Billion in tax relief for the richest Americans = 50,000 miles of rapidly deteriorating Interstate Highways + over 10,000 dangerous bridges + unknown miles of canals + a huge number of city streets, etc., all of which we will have to pay to fix sooner or later.

So millions of American kids will go to bed hungry tomorrow night all because the Cowardly Lion is more interested in Wall Street Barons and the others of the richest of the rich Americans, than the Middle Class he keeps blathering on about saving.

Merry Christmas, and I hope you have a job.

Free Money, Maybe

I received this email from a person who may, or may not, be named Kate who works for a website called CSN stores.

"Hi James,
Thanks so much for getting back to me and I'd be happy to explain a bit more. We would like to offer you a $30 gift code to use on any of our sites. You can either give this away to one lucky reader or keep it in order to do a review of a product on your blog. I know your blog isn't a typical "review or giveaway" type blog, but we work with a wide variety of bloggers and thought you might be interested.

Here are the details:

You can write the post however you'd like, I'd just need you to include the keyword link “modern décor” (exact phrase, don’t need accent though) linking to the particular site as the very first (preferably only) link on the post. This is one of CSN's sites I'm working to promote so please incorporate it as naturally as possible and if you need suggestions, please don’t hesitate to ask! It can be incorporated into a sentence like “CSN Stores sells everything from furniture to modern décor” but please feel free to use your own words and be as creative/ natural as you’d like.

For a review, I'd just need you to incorporate "modern décor" into a short post and send me a link when it's live. Then I'd send you the $30 gift code to use in order to a review a product from any of our sites.

For a giveaway, just include the keyword in the giveaway post and run the giveaway however you'd like! Please remember we can only ship within the US and Canada so limit your entrants that way. Additionally, we also ask that you don't have your readers comment on CSN's facebook wall. Once the post is live, let me know and I will send you the gift code to relay onto your winner so you can run the giveaway on your time frame."

Always remember that, "On the Internet, anyone can be a dog". But I have looked at a lot of their sites and the merchandise looks very good and the prices are fair. So if you are interested in 'Modern Decor', I suggest that you give their site a look.

Now here is the deal. I don't want the thirty bucks, but I would be happy to pass it on to any reader who could use it. I will now tell Kate (or whomever) that this blog is live. If I get a $30 gift code, I will announce it here and I will send it the first person who responds. Remember, continental U.S. only.

Let's see what happen!

I Am Truly Offfended!!

Last week, Obama called me (and all the people who agree with me, and there are a very large number) "sanctimonious" for raising objections to his huge gift of money to the richest people in the country. Webster defines that word as "affecting piousness; hypocritically devout". The week before that he called me (and all the people who agree with me) cowards because we are afraid of the direction this country is headed.

I feel personally offended by this display of extreme arrogance!!

At least Bert Lahr wasn't arrogant.

Monday, December 20, 2010

I am not the Only One!

I have already told you how good Matt Taibbi's book is at explaining how evil Goldman Sachs is as a company and as individuals. Now here is his take on the Cowardly Lion. Read and enjoy.

POSTED: December 15, 6:17 PM EDT | By Matt Taibbi
Bernie Sanders Puts Barack Obama to Shame

Not long ago I was sitting at home writing something for publication – I won’t say what, except that it was a passage about a certain politician on the Hill. Out of habit I launched into a description that was full of nasty and personal language, and I was about to press on to the next part of the piece when suddenly I hit a mental speed bump. A voice in my head whispered – this really happened – “If you write that shit and Bernie Sanders sees it, he’s going to be disappointed in you.” So I went back and removed the gratuitous body blows from the article.

I thought about this when I watched Bernie go through his amazing one-man filibuster against the Obama tax cut deal last week. Week after week, month after month, we watch politicians who disappoint us, not just as leaders but as people, failing to achieve the basic life-competency standard we expect of most grown-ups, doing things we wouldn’t tolerate from 15-year-olds. Whether it’s Mark Foley writing sexy letters to little boys, or Charlie Rangel or Duke Cunningham or Jerry Lewis doing the pay-for-play game, or even assholes like Orrin Hatch roaring with partisan excitement when the individual mandate – his own idea – was recently declared unconstitutional by a federal judge (who himself has financial stake in the health care business), these guys fail the common decency/honesty test with unnerving regularity. It’s sad but true, but in 99.9% of all cases, you wouldn’t think of looking up to an elected official as a moral role model. Which is why Bernie Sanders is such a rarity, and people should appreciate what he’s doing not just for his home state of Vermont, but for the reputation of all politicians in general.

I was in Washington last week and visited Bernie in his office, mainly to talk about the incredible results of the Federal Reserve audit, about which I’ll be writing more in the upcoming weeks and after the New Year. The audit of the Fed was undertaken because Bernie and a few other members of congress fought very hard during the Dodd-Frank regulatory reform debate to force open Ben Bernanke’s books, and as a result we now know the staggering details of the secret bailout era. We know that Citigroup received $1.6 trillion in loans, and Morgan Stanley $2 trillion, and Goldman Sachs – the same Goldman Sachs that bragged about how quickly it paid back its $10 billion TARP bailout – over $600 billion. We know that hedge fund billionaires who moved their corporate addresses to the Cayman Islands to avoid U.S. taxes were rewarded by their buddies in government with huge Fed loans; we know that the U.S. government likewise has been extending massive loans to a variety of Japanese car companies at a time when many American auto workers in Detroit have seen their wages cut in half, to $14 an hour. There’s that and there’s more on the outrage front, and we know it all because Sanders kicked and screamed and stamped his feet about Fed secrecy until just enough other members of the Senate decided to go along with him.

I’m bringing this up now to put into context what Bernie did on the floor of the Senate last week, standing up for eight hours and 37 minutes to make a case that the hideous deal that Barack Obama cut with the Republicans to extend the Bush tax cuts was an outrage to the very qualities that matter most to this politician, common decency and common sense. While everyone else in Washington was debating the political efficacy of the deal – the Hill actually published a piece talking cheerfully about how CEOs found a “new friend” in Obama, while the New York Times shamelessly ran a front-page “analysis” talking up the deal’s supposed benefits to the middle class and the political benefits from same that Obama would enjoy – Sanders blew all of that off and just looked at the deal’s moral implications. Which are these: this tax deal, frankly and unequivocally, is the result of a relatively small group of already-filthy rich people successfully lobbying an even smaller group of morally spineless politicians to shift an ever-bigger share of society’s burdens to the lower and (what’s left of the) middle classes. This is people who already have lots of shit just demanding more shit, for the sheer rotten sake of it. Here’s how Bernie put it:

"How can I get by on one house? I need five houses, ten houses! I need three jet planes to take me all over the world! Sorry, American people. We've got the money, we've got the power, we've got the lobbyists here and on Wall Street. Tough luck. That's the world, get used to it. Rich get richer. Middle class shrinks."

I contrast this now to the behavior of Barack Obama. I can’t even count how many times I listened to Barack Obama on the campaign trail talk about how, as president, he would rescind the Bush tax cuts as soon as he had the chance. He stood up and he said over and over again – I can still hear him saying “Let me be clear!” with that Great Statesman voice of his, before he went into this routine – that the Bush tax cuts were wrong and immoral. He said more than once that they “offended his conscience." Then, just as he did with drug re-importation and Guantanamo and bulk Medicare negotiations for pharmaceuticals and the issue of whether or not he would bring registered lobbyists into his White House and a host of other promises, he tossed his campaign “convictions” in the toilet and changed his mind once he was more accountable to lobbyists than primary voters. He pulled an Orrin Hatch, in other words, only he did it serially.

I can live with the president fighting for something and failing; what I can’t stand is a politician who changes his mind for the sake of expediency and then pretends that was what he believed all along. You just can’t imagine someone like Sanders doing something like that; his MO instead would be to take his best shot for what he actually believes and let the chips fall where they may, budging a little maybe to get a worthwhile deal done but never turning his entire face inside out just to get through the day. This idea that you can’t be an honest man and a Washington politician is a myth, a crock made up by sellouts and careerist hacks who don’t stand for anything and are impatient with people who do. It’s possible to do this job with honor and dignity. It’s just that most of our politicians – our president included, apparently – would rather not bother.

Friday, December 17, 2010

Did We Really Elect The Cowardly Lion To Be President??

Today, Obama signed a piece of crap that was a complete concession to the Republcan Party. He gave the richest Americans a HUGE gift just to get a minor change in the Unemployment Insurance. Now we will have to borrow over $800 BILLION from China to pay for his cowardice. It is impossible to believe that the Republicans would have dared to play show down if Unemployment Insurance had been proposed alone. And nobody but a full blown coward would have given a HUGE gift to the richest of all Americans. A whole bunch of rich people, Warren Buffet, Bill Gates, et al, have told him that they don't need, nor want, a tax break.

But this crappy legislation has another truly awful effect that nobody is talking about, and that is the rich are getting richer and the rest of us are getting poorer. The country is coming apart and that should truly scare the hell out of everybody. Obama blathers on and on about protecting the "middle class", but this bill cuts the legs out from under that untruth.

Let's take a minute to look at the real data about income distribution in the United States. The comparisons start with 1987 since in 1986 involved a major change in the income tax laws, and it ends in 2008 because that is the latest available data.

In 1987, there were 10,615,000 households in the top 10% of all households filing tax returns. In 2008, there were 13,996,000 households in the top 10%. That is an increase of 32%.

In 1987, the top 10% of all households received 36.90% of the total of all Adjusted Gross Income reported in the United States. In 2008, that share had grown to 45.77%

So not only are there a lot more rich people in the U.S., but they now control almost half of the income in the country. 10%=46%. Like that equation?

In 1987, the top 10% had $1,038 BILLION in Adjusted Gross Income, but by 2007, they controlled $3,858 BILLION, an increase of +372%. The number of people grew 32% while their income grew +372%! The rich getting richer? You bet!!!

Hang on, it gets worse! In 1987, the top 10% paid 19.77% of their Adjusted Gross Income in Income Taxes. By 2008, that percentage had fallen to 18.71%. Not only are they getting richer, they are paying a smaller tax bill.

And these are the people that the Republicans just gave a huge tax break. And Obama refused to take a stand against it?

This rapidly increasing of two Americans is not just some intellectual exercise. In 2003, George Packer has this to say about the growing distortion of incomes in the U.S.

"The relationship between democracy and economic inequality creates a kind of self-perpetuating cycle: the people hold the government in low esteem; public power shrinks against the might of corporations and rich individuals; money and its influence, claim a greater and greater share of the political power; and the public, priced out of the democratic game, grows ever more cynical about politics, and puts more of its energy into private ends. Far from creating a surge of reform, the erosion of the middle class has only deepened the disenchantment."

Does that sound like anything you have seen happening lately? The growing inequality in America is a greater threat to the future of the country than any war or any deficit. And Obama has just gone out of his way to increase that inequality.

Thursday, December 16, 2010

Obama's Bizarre Meeting

In addition to the CEOs listed in the last post, these people also attended. The CEOs of................
Eli Lilly
And his pal, the billionaire hotel owner from Chicago, Penny Pritzker

The only person I can identify so far that would have even the remotest understanding of the needs of small businesses is John Doerr, the venture capitalist from the Silicon Valley.

The great difficulty we are facing is that our problem is only going to get worse until (or if)the administration discovers the fact that the way out of The Great Recession is to put money into the tills of small businesses. In the last two years, over 400,000 small businesses disappeared. Assume that each owner had nine employees so a total of ten jobs disappeared with each disappearing business and you understand that FOUR MILLION small company jobs have already disappeared. As each small business goes out of business, it creates new people on the unemployment benefit line AND removes more jobs from the economy.

And in April, 2011, over two million American families who escaped the chop this month will be out of unemployment benefits and even more dollars will be lost to the order books of small businesses.

So instead of putting people to work, Obama spends all of his time catering to millionaires and billionaires, and running up the deficit and the national debt. How can any of this be good?

No, wait a minute. There is some good news. In a couple of weeks, we will be seeing the back side of Larry Summers, who I think may well have been the most dangerous person in the world for the last two years.

Remember that Larry's mathematical models of the economy "prove" that if you are unemployed it is because you are lazy. Well, two smart people in the San Francisco Fed came up with a simple test of that idea. They compared the length of time two different groups of people were unemployed; one group had been laid off or lost their jobs in some way, and the other group of people had quit their jobs, or were new entrants in the labor force. The result of their work is that unemployment benefits may increase unemployment by 0.4% to 0.8%, a trivial amount.

Say good bye to Larry everybody, and good riddance.

Wednesday, December 15, 2010

Is This Alice In Wonderland??

Everyone, and I mean everyone, agrees that 65%-70% of all new jobs are created by small businesses. That has been true for over 40 years.

Now everyone also seems to agree that creating new jobs is the most important task facing this country.

So today, Obama convenes a meeting with twenty business people to talk about how to create new jobs. And who was in that meeting? The CEOs of ............

General Electric
American Express
and fifteen other huge corporations. (I can't yet find a complete list.)

Understand that I have the highest possible regard for these people. I bought GE stock completely because Jeff Immelt is the CEO. Indra Nooyi, CEO of PepsCo, is an amazing leader who is changing the direction of a company with $60 Billion in sales.

But these are not the companies that create new jobs!!

What is it that I do not understand?? Have we all fallen through the Rabbit Hole?

Is there nobody in Washington to tell him the truth? Or does he just not care?

This is getting really crazy. And scary.

Tuesday, December 14, 2010

Goldman Sachs Redux

The subtext in The Great Recession Conspiracy is that a cabal of Wall Street banks, led by Goldman Sachs, is actually running the U.S. Treasury for their own benefit.

An earlier blog exposed Lloyd Blankfein as a liar when he claimed that Goldman Sachs was not on the verge of bankruptcy and did not need a government bailout. In reality, all the government financial activities were designed to do one thing, and one thing only, e.g. keep Goldman Sachs out of bankruptcy.

But reality is much worse than that. You will find that reality in a superbly researched book by Matt Taibbi (the author from Rolling Stone who now lives in infamy) and his book is called Griftopia. I highly recommend that if you have not read our book, do that first, and then watch how Matt expands on our ideas and fills in details.

Remember the AIG fiasco that Timmy Geithner presided over? Well, AIG was going broke because of all the "insurance" policies they had written to cover the bad bets made by the Wall Street banks. The Fed was making the point that AIG was so big that if it failed, the entire U.S. economy was likely to go under and they proposed that every creditor bank take some of the loss. In the business, it is called taking a "haircut". Goldman Sachs absolutely refused!!! They demanded a 100 Cent on the dollar payout or they would walk out of the meeting.

They put the entire economy of the U.S., maybe the entire world, at risk of collapse to protect their own bonuses!! These people are truly EVIL!!!

Here is what Matt says about Goldman Sachs on page 219 of Griftopia:

The bank's unprecedented reach and power has enabled it to manipulate whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere--high gas prices, rising consumer credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money is going somewhere, and in both a literal and a figurative sense Goldman Sachs is where it is going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance of earth, pure profit for rich individuals."

Wait until you find out what Goldman Sachs did to the price of gasoline! You will want to bring back burning witches at the stake!!

And Barack Obama can't stop kissing their asses!

Did I say I was disappointed in all my support for this guy??

Another Voice With Common Sense

Fed’s Contrarian Has a Wary Eye on the Past

KANSAS CITY, Mo. — All year, Thomas M. Hoenig has been saying no.

As the lone dissenter on the Federal Reserve committee that sets interest rates, Mr. Hoenig, the president of the Federal Reserve Bank of Kansas City, has been a persistent skeptic of just about everything the Fed’s chairman, Ben S. Bernanke, has done to try to stimulate the flagging recovery.

Mr. Hoenig’s latest, loudest objections, aimed at the Fed’s risky $600 billion infusion into the markets to reinvigorate the economy, have made him a champion of the Fed’s critics in Congress, on Wall Street and among business leaders, who, like Mr. Hoenig, fear that the central bank is risking runaway inflation, asset bubbles and a weakened dollar.

At 64, Mr. Hoenig has witnessed jolts in the nation’s economic history that make him deeply skeptical of short-term fixes. He says he believes the Fed’s tools for fixing the economy in the short run are limited and the potential for things to go disastrously wrong is very high.

If it were up to him, he would keep interest rates very low, but would not promise to keep them at essentially zero for “an extended period,” as the Fed has announced. He says he thinks that trying to lower long-term rates, as the Fed is doing by buying bonds, is a mistake. The recovery, however slow and painful, he says, cannot be hurried.

As the longest-serving regional Fed president, his views are shaped by the uncontrolled inflation of the 1970s, the spike in land prices that followed and the ensuing banking and thrift crises.

To him, Mr. Bernanke’s plan is “a dangerous gamble” and “a bargain with the devil,” strong words that have rankled some officials of the Fed, where dissent is tolerated but not celebrated.

In an interview on Dec. 6 in his office here, he did not appear to relish going against the grain, but lately he has not been running from the spotlight. “It’s never easy to disagree against a majority,” he said. “It’s hard. It’s not something that I take lightly.

“Some people think I should be more part of the group,” Mr. Hoenig said. “I’m not a group person.”

A month after the Fed announced its intentions to buy bonds and push down interest rates, investors have done the opposite by driving up long-term rates, hardly a help to a sputtering recovery.

Mr. Hoenig, who is likely to vote no again on Tuesday when the committee meets for the last time this year, said it was too early to say whether the market reaction and the uncertainty had vindicated his position.

“I don’t want to say that I’m right and someone else is wrong,” he said. “Only time will tell whether I’m correct.”

The son of a Midwestern plumbing contractor, Mr. Hoenig (pronounced “HAWN-ig”) spent his career at the Kansas City Fed. He is cautious, courtly and hardly a partisan, though he recently addressed Congressional Republicans at their invitation. In his unwavering dissents, seven this year, and in his wariness of Wall Street, his views seem rooted in the agrarian and populist tradition that is mistrustful of concentrations of power.

He has called for breaking up giant Wall Street banks and severely restricting their trading activities, a stance that has endeared him to some liberals. He is commonly characterized as an inflation hawk, a label Mr. Hoenig rejects as overly simplistic. If he is hawkish on anything, he says, it is financial stability.

“I don’t like having unemployment at 9.8 percent,” he added. “It’s just unacceptable.” He concedes, however, there is not much the Fed can do about it.

As a young economist, he witnessed the rampant inflation of the 1970s, which was curbed only after Paul A. Volcker became Fed chairman in 1979 and promptly raised interest rates to double-digit levels, setting off two painful recessions. The strong medicine worked; inflation has been largely under control since 1982.

During the 1980s, Mr. Hoenig worked in bank supervision and regulation at the Kansas City Fed, where an agricultural crisis and land bubble prompted a string of bank failures. Those included the collapse of Penn Square Bank in Oklahoma City in 1982, Mr. Hoenig’s first experience managing a crisis, and later the Continental Illinois insolvency, then the nation’s largest bank failure.

Mr. Hoenig said he believed the Fed had not always learned from its mistakes. By keeping interest rates too low for too long, in his view, the Fed contributed to the dot-com bubble that burst in 2001 and the even bigger housing bubble that popped in 2007. (Before this year, Mr. Hoenig had dissented four times, in July 1995, May and December 2001 and October 2007, all in opposition to lowering short-term interest rates.)

“It is my concern that, by understandably wanting to see things move more quickly, we create the conditions for repeating the mistakes of the past,” he said.

Mr. Hoenig’s mantra is that monetary policy works with “long and variable lags,” meaning that the consequences of today’s policies may not be felt until much later. By keeping short-term interest rates near zero, as the Fed has done since December 2008 — and which he supports but not indefinitely — the central bank is increasing the risk of inflation and instability down the road, he says.

But most Fed officials say they believe that Mr. Hoenig’s worries are exaggerated. In a televised interview this month, Mr. Bernanke said he was “100 percent” confident of the Fed’s ability to tighten monetary policy and raise interest rates when the time came, and called fears of inflation “way overstated.”

Other economists say Mr. Hoenig’s viewpoint has seemed inflexible.

“I find it hard to understand why Hoenig is still worried about inflation when the obvious trend is downward, toward lower inflation with a risk of deflation,” said Joseph E. Gagnon, a former Fed economist who is at the Peterson Institution for International Economics in Washington.

Mr. Hoenig’s contrarian disposition partly reflects his Midwest upbringing, far from the Wall Street-Washington axis of influence.

The second of seven children, Mr. Hoenig grew up in Fort Madison, Iowa. He attended a small college in Kansas, was drafted into the Army and served a year in an artillery unit in Vietnam, then received a Ph.D. in economics at Iowa State. He joined the Kansas City Fed in 1973 and became president in 1991.

Lu M. Cordova, the chairwoman of the Kansas City Fed’s board, said Mr. Hoenig did not seek attention. Indeed, he sought the board’s guidance before he delivered a March 2009 speech, “Too Big Has Failed,” which received widespread notice. “He really agonized about whether to speak out or not,” she said.

Even critics of Mr. Hoenig acknowledge he has been prescient.

In a speech in 1999, shortly after Congress repealed the Glass-Steagall Act, the Depression-era law that separated investment banking from commercial banking, he warned that “in a world dominated by mega-financial institutions, governments could be reluctant to close those that become troubled for fear of systemic effects on the financial system.”

Sure enough, in 2008, the Fed helped sell Bear Stearns to JPMorgan Chase, rescued the American International Group and, after the collapse of Lehman Brothers, bailed out the financial system.

The crisis has only made the biggest banks even bigger. “They have enormous power,” Mr. Hoenig said. “Just look at their lobbying expenses. I use the word — and it’s a fairly flammable word — oligarchy. These things are huge and powerful, and that’s where the money is. This country through its history has abhorred concentration of financial power, and for good reason.”

Tuesday’s Fed vote will be Mr. Hoenig’s last, because the presidents of the Fed’s regional banks, other than New York, share votes under a rotation system. Mr. Hoenig does not have a vote next year, and he must retire after he turns 65 in September. As for his future, Mr. Hoenig, a train enthusiast who reads biography and history in his spare time, is certain that he will not follow other Fed veterans who have gone to work on Wall Street. “I can tell you one thing,” he said. “I’ll never work for a too-big-to-fail bank.”