From uExpress
By Ted Rall

Pro-Obama political cartoonists have drawn variations of the same cartoon: the president, in the role of badgered parent on a family trip, is driving a car labeled “The Economy.” The American public, depicted as Uncle Sam or Joe Average, whines: “Are we there yet? Are we there yet? Are we there yet?”

With official unemployment approaching 10 percent and underemployment at 16.5 percent, Americans are running out of money–and patience. Obama’s approval ratings are down between 15 and 20 points, meaning that he has lost one in six Americans. His biggest weakness: the economy.

“I think the public knows three things: We inherited a total mess; we’re working hard on it; and we’re not going to get out of it overnight,” says Chief White House propagandist Rahm Emanuel. That part is true.

The trouble for Obama is that people don’t see any light at the end of the tunnel. “The key to what this year is about is rescuing the economy from falling off the cliff and trying to put in place the building blocks of recovery”–i.e., bailing out the banks, insurers and automakers, says Emanuel. That’s what 2009 has been about for Obama. But for ordinary Americans, 2009 is about keeping or finding a job.

Creating jobs, unfortunately, doesn’t seem to be an Obama Administration priority.

Were the bailouts necessary? Economists won’t know for years. What we do know is that the Administration’s approach won’t give the American people what they want and need more than anything else: jobs.

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From TruthOut
By Dean Baker

As a card-carrying economist, I don’t like the unlimited tax deduction for health insurance premiums. It is regressive and just plain bad policy.

Low- and moderate-income people are both less likely to have employer-provided health insurance, and benefit much less from the tax deduction if they do. Most of these families will have no income tax liability. So, if they get a $12,000 employer provided plan, their tax savings will only be on the 15.4 percent payroll tax liability, which would come to $1,850 in this case.

By contrast, if a family earns $250,000, it is in the 33 percent tax bracket. If this family gets a $25,000 policy from an employer, the government is effectively paying almost half the tab, or $12,100. In this case, the government ends up paying almost seven times as much to subsidize the health care of a high-income family as it does for a moderate-income family. That policy is hard to justify.

Of course the vast majority of the people who benefit from the tax deductibility of employer-provided health insurance do not earn more than $250,000. Most are solidly middle-class, many of them are union members.

The unions have taken a strong position against efforts to place a cap on the size of the tax deduction as a way to help finance health care reform. Many union contracts provide for plans that would likely fall over the cap. As a result many middle-class union members could be looking at tax hikes in the neighborhood of a $1,000 a year if caps were imposed.

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From The NY Times
By Paul Krugman

The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us?

First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America.

Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away.

Third, it shows that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely.

Let’s start by talking about how Goldman makes money.

Over the past generation — ever since the banking deregulation of the Reagan years — the U.S. economy has been “financialized.” The business of moving money around, of slicing, dicing and repackaging financial claims, has soared in importance compared with the actual production of useful stuff. The sector officially labeled “securities, commodity contracts and investments” has grown especially fast, from only 0.3 percent of G.D.P. in the late 1970s to 1.7 percent of G.D.P. in 2007.

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From Common Dreams
By Don Monkerud

In June 2009, the U.S. economy saw its second steepest decline in 27 years. New jobless claims increased, business inventories fell and exports plunged as bad economic news persisted.

Will the once high-flying American wealth machine continue to produce the vast inequalities of the past?

Only two years ago, Steve Forbes, CEO of Forbes magazine, declared 2007 “the richest year ever in human history.” During eight years of the Bush administration, the 400 richest Americans, who now own more than the bottom 150 million Americans, increased their net worth by $700 billion. In 2005, the top 1 percent claimed 22 percent of the national income, while the top 10 percent took half of the total income, the largest share since 1928.

In June 2009, the Merrill Lynch Global Wealth Report estimated the number of the world’s wealthiest people declined by 15 percent, the steepest decline in the report’s 13-year history. The number of millionaires in the U.S. fell by 19 percent to 2.5 million people.

Analysts tell us the economy is being restructured, but how will the disparities in wealth between the rich and the poor play out?

“The source of wealth has changed over the past 30 years; corporations have become the engine of inequality in the U.S.,” says Sam Pizzigati, associate fellow at the Institute for Policy Studies in Washington D.C. “In the past, wealth came from ownership: Today it comes increasingly from income.”

Read more Income Inequality

From The NY Observer
By Joe Conason

Very soon, Congressional leaders are expected to announce the creation of a new commission to investigate the real causes of America’s crippling financial disaster. House Speaker Nancy Pelosi has reportedly told Treasury Secretary Timothy Geithner that this investigative panel will be modeled on the legendary “Pecora Commission,” which held a series of hearings on Capitol Hill in 1933 that arraigned the nation’s biggest bankers and stock swindlers before an angry and suffering people. Named for Ferdinand Pecora, the cigar-chomping New York prosecutor who oversaw the proceedings, those confrontations mobilized public support for the financial reforms of the New Deal – which curbed the excesses of Wall Street’s overclass until they were overturned a decade ago.

But unless the Speaker and her colleagues summon much greater courage than they have displayed to date, any comparisons to the Pecora investigation will only highlight the failure of the Democrats to live up to their heritage. The way to begin to understand that incipient disappointment is with a short history lesson, and the way to start that lesson is to note that the Pecora “commission” was not really a commission at all, in the sense that we have come to understand that term – meaning an excuse for politicians to avoid their responsibilities by palming them off on a group of unelected appointees.

No, the Pecora commission was nothing like that. The so-called commission was in fact the Senate Banking and Currency Committee itself, which under Republican leadership had undertaken a desultory investigation of the 1929 Crash and the onset of the Great Depression that had dragged on for a year or so without much progress. That changed with the election of 1932, which sent Franklin Delano Roosevelt to the White House and gave control of the United States Senate, including the Banking Committee, to the Democrats. In January 1933, Pecora had been appointed to write up the weak and incomplete findings of his three predecessors – but the Senate Democrats, with the encouragement of the new president, encouraged him to continue and extend the committee’s investigation.

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From TruthDig
By Robert Scheer

Connect the dots: Goldman Sachs made $3.44 billion in profit this past quarter, while the U.S deficit topped $1 trillion for the first time in the nation’s history and appeared to be headed toward doubling that figure before the budget year is out. Since most of the increase in the federal deficit is due to bailing out the banks and salvaging the greater economy they helped destroy, why is the top investment bank doing so well?

Well, because that was the plan, as devised by Bush Treasury Secretary Henry Paulson, a former CEO of Goldman Sachs. Remember that Lehman Brothers, Goldman’s competitor, was allowed to go bankrupt. The Paulson crowd wouldn’t let Lehman change its status to that of a bank holding company and thus qualify for federal funds; soon afterward, Goldman was granted just such a deal, worth a quick $10 billion. Much is now made of Goldman paying back part of its bailout money, but forgotten is the $12.9 billion that Goldman got as its cut of the $180 billion AIG payoff. That is money that will not be paid back.

Goldman is considered a very smart bank because it was early in reducing its exposure to the mortgage derivatives that in large part caused the meltdown. However, it had done much to expand the market and continued to sell suspect derivatives to unwary buyers as sound investments, even as Goldman divested. The firm still holds $1.85 billion in real estate and lost $499 million in the previous quarter on bad loans, but made up for it by playing the vulture role and issuing high-interest debt to governments and companies made desperate by the recession that the financial gimmicks of the banks brought on in the first place.

And Goldman was not just another bank. Before Paulson ran the Treasury Department, another former Goldman head, Robert Rubin, pushed through the repeal of the Glass-Steagall controls on banking activity. While some now play down the significance of this radical deregulation, not so Goldman Sachs CEO Lloyd C. Blankfein—at least not back in June 2007, when the markets were still doing well. “If you take an historical perspective,” Blankfein told The New York Times by way of explaining his company’s spectacular success at the time, “we’ve come full circle, because that is exactly what the Rothschilds or J.P. Morgan the banker were doing in their heyday. What caused an aberration was the Glass-Steagall Act.”

Read more Striking Gold

From Reuters News
By Lynn Adler

U.S. home foreclosure activity galloped to a record in the first half of the year, overwhelming broad efforts to remedy failing loans while job losses escalated.

Foreclosure filings jumped to a record 1.9 million on more than 1.5 million properties in the first six months of the year, RealtyTrac said on Thursday.

The number of properties drawing filings, which include notices of default and auctions, jumped 9.0 percent from the second half of 2008 and almost 15 percent from the first half of last year.

“Despite everybody’s best efforts to date we’re not really making any headway against the problem,” Rick Sharga, senior vice president at RealtyTrac in Irvine, California, said in an interview.

Loans that were temporarily frozen by various state and federal programs, which mostly ended in March, started pushing through the process in the past three months.

One in every 84 households with loans got at least one foreclosure filing in the first half of this year.

“I don’t think this suggests the economy is any worse than anyone expected but I certainly don’t think it shows by itself any signs of improvement,” Sharga said.

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From The NY Times
By Eric Dash

Even as it weathers the worst economic downturn in decades, JPMorgan Chase on Thursday announced a $2.7 billion second-quarter profit from stellar trading and investment banking results.

The strong showing may put to rest some worries that the bank was allowed to pay back its $25 billion taxpayer investment too early, after it passed the Treasury Department’s stress test in May. But its quick resurgence in earnings, along with Goldman Sachs’s announcement of a $3.4 billion quarterly profit on Tuesday, is bound to raise fresh concerns about soaring pay levels and growing influence in Washington.

JPMorgan is emerging with renewed confidence, taking advantage of the financial crisis to vault ahead of longtime rivals in investment banking and grab market share in mortgages and retail banking. Jamie Dimon, the chief executive, has cemented his status as one of America’s most powerful and outspoken bankers. And after acquiring the retail bank Washington Mutual last fall, revenue from its new branches is starting to pad its earnings.

Even so, its consumer lending businesses have been battered by the recession. JPMorgan will set aside another $2 billion this quarter to cover future losses, bringing the total amount of money it has socked away to more than $30 billion. Credit card charge-offs have doubled from a year ago, to more than 10 percent of all loans, and will probably wipe out profits in both this year and next. Mortgage and home equity losses continued to climb, though there are some tentative signs that fewer borrowers are falling behind on the payments.

Read more Huge Profits

From BuzzFlash

Stepping up a campaign for Federal Reserve accountability, Sen. Bernie Sanders (I-VT) today questioned whether some of more than $2.2 trillion in secret subsidies went to Goldman Sachs and other bailed-out banks now planning to shower executives with huge bonuses.

Sanders voiced his concern in a letter to Fed Chairman Ben Bernanke and Treasury Secretary Timothy F. Geithner and during remarks at an Economic Policy Institute conference.

Goldman Sachs yesterday reported that its profits surged on second-quarter income of $3.44 billion. The turnaround came less than a year after reckless investments by Goldman and other Wall Street firms triggered a worldwide recession and drove many rivals out of business.

With the good times rolling again on Wall Street, Goldman repaid its $10 billion taxpayer bailout and now plans to dole out the biggest bonuses in its 140-year history. The investment bank reportedly plans to pay as much as $20 billion this year in bonuses and other compensation, about $700,000 per employee. Goldman is one of 10 big banks that announced plans to return bailout funds so they could evade restrictions on executive compensation and bonuses.

“The question I have is how do we know that right after Goldman and other banks pay back billions to the Treasury, the Federal Reserve doesn’t turn around and provide them with billions more with no strings attached?” Sanders asked. “The answer is that we don’t know. Ben Bernanke refuses to say.”
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From Tom Dispatch
By Barbara Garson

For the book I’m writing about unemployed Americans, I had no trouble finding accountants, brokers, cashiers, or die casters. Admittedly, I had to go out of town to interview the die casters. But when I arrived, alphabetically, at unemployed editors, I had only to look in my address book.

Financiers were further from my life experience than either die casters or editors. Yet the “do you know anyone who…?” method still proved an effective way of turning up unemployed hedge-fund analysts and bank loan officers — and within a week at that. It was only when I refined my search to ferret out unemployed financiers who had actually handled those infamous “toxic assets” that I hit the proverbial brick wall.

Since mortgage-backed securities and the swaps that insure them had been the downfall of Lehman Brothers, Bear Stearns, Merrill Lynch, and the giant insurance company AIG, packs of bankers who worked on them must, I assumed, be roaming free on the streets of Manhattan. Yet I couldn’t find a single one.

Finally, I phoned a law firm representing Lehman Brothers employees in a suit for the pay they were owed when the company shut down without notice. I asked the lawyer if he could possibly inquire among his unemployed clients for someone, anyone, who used to work with mortgage-backed securities and might be willing to talk about how he or she was getting by today. “I don’t have to use real names,” I assured him. Many of the unemployed people I’d already interviewed felt so lost and ashamed that I had decided not to use their real names. Unemployed bankers deserve anonymity, too.

But the lawyer made it clear that that wasn’t the problem. “Most of them were snapped up immediately by Barclays,” he said. He represents other financial plaintiffs as well, and he seemed to think that the kind of person I was looking for hadn’t remained unemployed very long.

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