TYT: Cenk's 5 Point Financial Recovery Plan

[ihavenobias]

Run time: 08:28 https://www.youtube.com/watch?v=ZJipMiGsqdA   Posted on YouTube: January 16, 2010 By YouTube Member: Views on YouTube: 0   Posted on DU: January 18, 2010 By DU Member: ihavenobias Views on DU: 1118

 
Summary: Cenk shares his 5 point plan to repair our financial system and avoid another economic collapse. First, he says the shareholders need more power. Then he says we need to limit credit default swaps (and outright ban the naked CDS) and leverage. The credit rating agencies can't be paid by the people they're supposed to rate, they need to be paid by the investors. Finally, if you make a loan, you need to keep at least half of it (as opposed to the 5% proposed by the Obama Admin). He also makes mention of more Fred transparency. Now, before you leave a comment on this plan I can't recommend enough that you actually watch the video get a fuller explanation.

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[ProfessorPlum]

1. Proud to be the first K&R for this sensible set of recommendations

[Warpy]

2. Sensible and not so sensible

Shareholders get to vote yes or no on board members. Unfortunately, the choice is limited to whom the executives want. Shareholders need to be consulted on things like executive pay ratios if executive greed is to be curtailed. That's what's not going to happen. Shareholders already "control" who sits on the board by their yearly votes. They don't control which names are proposed and are unlikely to.

A re institution of the progressive income tax with a confiscatory top rate is also necessary to be a disincentive to executive greed. Sure, let the boys use the corporate penthouse and corporate jet during their tenure. Just tax them 90+% on it if they want to take that stuff with them.

If banks are forced to retain 50% of every mortgage they write, they'll be writing damned few mortgages. That's why Fannie Mae was created in the 1930s, to have a place banks could sell those 30 year mortgages that would have tied up their own money for too long to be worthwhile. For their part, the banks got fees for administering the mortgage monthly, giving them an incentive to write mortgages that would be paid monthly.

Banks, left to their own devices, prefer the five year balloon mortgage, something people are forced to renegotiate every five years if they want to keep a roof over their heads and which they will never pay off. That's what happened before Fannie Mae was created and it was starting to happen again when few people qualified for a traditional mortgage in a bubble market. Mortgage companies were supposed to do the bank's legwork in investigating the borrower and certifying the property. At the end of the bubble, they were just writing blind paper and selling it. The people who did this need to be prosecuted and they're not.

He's right about tightening up the leverage rule, he's right about eliminating most CDS.

In all of this, the one essential is the re institution of Glass Steagall, separating banks from speculative brokerages. The last thing this country needed was Gramm's go ahead for the banks to start big time gambling with depositors' money.

[cufford]

3. Sensible solutions?

Well, maybe these ideas are sensible on their own, but they have little to do with our economic collapse, nor would implementing them make a bit of difference to our current situation.

Our economic collapse is due to 30+ years of declining wages, empowered by so-called "Free Trade" deals and resulting outsourcing of our best working class jobs.

We're in this mess because the masses no longer make enough to be "consumers" of goods and services beyond the most basic, life-sustaining ones, and for many they can't even do that.

We're in the mess because over the past few decades a critical mass of the best paying, working-class jobs have been eliminated from this country.

We're in this mess because of low wages for the masses. You can't feed the economy if you can't consume goods and services.

So while everyone seems to be caught up in this scapegoating of Wall Street financiers for this collapse, we're ignoring the obvious; manufacturing, gone. Industry, gone. Leading export nation, gone. A critical mass of good paying jobs for the masses, gone.

The reason for the collapse is a lack of demand, of consumption. And that's only accelerating by the day. All due to steadily declining wages for the masses since the mid 1970s, and kicked into high gear by NAFTA and subsequent so-called "Free Trade" policies.

Are there rapacious, immoral financial practices going on on Wall Street? No doubt. Should we try and crack down on that? Of course. But that has little to do with our economic collapse, and thus fixing those won't do a thing for our economy as a whole. Cenk hasn't offered anything close to a plan for recovery in this country. He's just talking about these mostly insignificant things in the big picture.

The only thing that will is rising wages for the masses. Period. Good paying jobs results in people with money to spend. That creates demand, which creates more jobs, and thus more demand. This is what built our once greatest economy on the planet. Low wages kills demand, and results in job losses. And the more jobs that are lost, the more jobs that will then continue to be lost. It's a domino effect that has now progressed to the point where it is self-perpetuating slide to the bottom, and it can't be stopped.

It's sad to see that some of our most well-known and widely broadcast progressive voices (like this guy, and Ed Schultz) simply don't get what's actually going on. They just lather, rinse, repeat the same nonsensical meme that the powers that be have effectively established; that we're in this mess because of the past ten years of Wall Street Bankers and their investment schemes. That we have to get those evil derivative traders and speculators, and that'll fix things. Um...no, it won't.

So this is completely missing the obvious. That there's almost no "middle class" left, thanks to decades of systematic, declining wages for the masses. The middle class spending their nice paychecks each week was the very fuel of our economy, and that's now gone. The well is dry.

We're not in this mess because of derivatives or dishonest mortgage brokers. We're in this mess because of traitorous trade policies, pushed by big corporations so that they could fire their well paid union workers and move our best working class jobs to other countries. Now we're a country of minimum wage jobs.

THAT is the problem. And the solution for "recovery" is but one thing, and it's not even mentioned above. It's driving wages back up. Period.

We'd have to reverse the trade deals, bring back the old level of tariffs, forcing manufacturing and industry back into this country, along with a rebirth of organized labor (unions) to drive wages back up.

If we doubled the minimum wage, our economy would take off like a rocket. A good start to a long term plan of restoration of living wages for the masses. Everyday people could once again afford to buy those new cars, T.V.s, take vacations, etc., etc. This increase in demand would fuel more new jobs from A to Z in goods and services. That's what we need. Every day people with money in their pockets to spend and "consume" with again. That, is the fuel of an economy that we once had.

But alas, none of this is in the cards. To the contrary, they're continue to twist the screws even tighter on what's left of the middle class. Even lowering the minimum wage in one state already, a disastrous precedent that will only further accelerate our decades-long plunge to third-world economic status. A country ruled by Oligarchy, with a small, ultra wealthy elite class, and the rest of us living in dystopian poverty. It's just around the corner folks.

With all due respect to Cenk, he has no idea what's going on or how to "recover" it. His focus is in the wrong place.

In contrast, Thom Hartmann has been, for years, harping the same message I have just repeated. A lone voice of rational, objective, common-sense thinking and wisdom on our airwaves.

The problem: Low wages

A plan for recovery: Rising wages.

It's not rocket science, and it's not nearly as complex as so many want to believe it is. And that makes is much harder to fix. But it's right in front of us if people like Cenk would take their blinders off and stop repeating the propaganda that comes from Washington.

We don't need "more jobs" nearly as much as we need "better paying jobs". Our problem is UNDERemployment for the masses, not UNemployment for some.

A nation of minimum wage workers is the problem. That, IS the problem.

[ihavenobias]

4. I love Thom Hartmann.

In fact, I'm a member, so I pay each month for full access to his podcasts (crazy enough I'm listening to him as I type this). And I agree that we have disastrous trade policies and that things have gone downhill for the last 30 years or so (etc.). But this video was focusing on the gambling/lack of regulations piece of the equation. The issue of (for example) tax rates was handled elsewhere. It's hard enough to get people to watch an 8 minute clip, imagine trying to get them to a 20 minute clip, which I can tell you firsthand is incredibly difficult.

At any rate, I'm confident (as a loyal Hartmann listener) that Thom would support the majority of what Cenk proposes here. Unless you're listening to a different Thom Hartmann (maybe Tom Hartmann ;)), I don't see how you can disagree with that point. So I think the bottom line is that in addition to what Cenk proposes (after having ), we also need to address our trade policy, tax policy, etc. The 'either/or' rant is misplaced IMO.

[cufford]

10. You misread

I didn't say "either/or" or say that low wages was the "only" issue, only the most important factor in our economic decline. Which it is.

I also clearly acknowledged that these other problems do also exist and that we should do something about them. Just that it's not the highest priority.

And Thom Hartmann does often discuss and support my contentions - a lot - and it's the basis of many economic issues he discusses. He mentions almost every day how we no longer manufacture anything in this country (I stated this also), along with everything else going on. You can't just talk about one thing every day.

Aside from that, it seems to me that those "countless economists, professors and politicians" never do talk about the low wages and trade issues (which is mind-boggling). It's the big elephant in the room; what so-called free trade has done to our economy. Nobody wants to talk about it, understandably. To do so is to admit you supported something so bad. But a lot of people saw this coming way back when. Ross Perot predicted exactly what's happening now when he debated Al Gore over NAFTA some 18 years ago or so. He asked the very question: "what's going to happen in 20 years when nobody can afford to buy those new cars anymore). Well, the big automakers will go bankrupt for starters!

What is so astonishing is just how many of the prominent, so-called experts have been completely missing it on our economy for the past two years. All of them calling this a temporary "recession". Constant talk about "recoverys" and "turn-arounds", when it's plain as day none of that is reality.

For the past year they've been saying "the recovery is just around the corner". "The recovery is under way", and they keep pushing it back, and back, and back, and keep saying the same thing over an over, and of course nothing changes. Because they're all WRONG! Because it is about low wages, and this isn't a cyclical downturn. And you can't compare it with the Great Depression or any other previous, post-industrial America. It's just nonsense. It's all ignoring that fact that over 30 years our economy has been restructured from an industrial, manufacturing, exporting, good-paying jobs for the masses economy, to a minimum wage, service industry economy. It's fundamentally changed from anything this country has ever been since the industrial revolution.

So, I hate to tell you, but all those professional sources you talk about have long been proven wrong.

This isn't rocket science. It's plain as day. High paying jobs create demand, which creates more jobs and thriving economy. That was before the war on labor prices in this country eliminated a critical mass of these good paying jobs for everyday people. Now we have not enough people with enough income to drive the economy.

And by the way, I bet if you asked Thom what was more important to our nation's economy, what to focus on first, he'd agree with me that we need to fix the trade problem and begin driving wages back up.

Are there other things to, like what Cenk is focused on. Sure, and I said that in my original post. It's just not the most important stuff. We need to attack the important things first, and then worry about holding Wall Street crooks accountable for their crimes.

In fact, we should be holding our elected officials accountable for selling this country down the river by supporting and enacting these traitorous trade policies on behalf of big corporations.

[ihavenobias]

11. We're talking past each other.

And no, "all those professional sources" have not been "proven wrong", unless you mean to tell me you went back in time and watched everything at TYT Interviews (from the likes of Dean Baker, William K. Black, Paul Krugman, etc.) and had time to evaluate their claims over time.

And no, the economists/professors Cenk has had on the show generally have NOT said that recovery is just around the corner, and Cenk himself has not said that. In fact, he recently had a segment on the comments of Joseph Stiglitz and Simon Johnson on the fact that we may have an even bigger economic crash in 2010. At any rate, we need to seriously look at both sets of ideas, i.e. regulations AND wages/economic infrastructure. If you still disagree I recommend reading up on the effect interest rates have had on manufacturing:

http://www.harpers.org/archive/2009/04/0082450

[cufford]

13. Think what you like

I have been very well read, and I've watched and listened to the mainstream voices that you speak of, and the dominant meme has been all about a "recession" that is "cyclical" and it's just a matter of time and everything will be fine again And they've been predicting turn-around for two years, and guess what, we're still breaking records for everything bad, and with no end in sight.

You're deluding yourself with the rhetoric you've been fed. You're so convinced it's right because people have high profile voices here and there.

But the proof is in the pudding. We're crashing, and it's mostly because of the war on labor prices over the past 30 years.

Everything else is secondary.

Anyway, it's pointless to try and educate you when you clearly don't want to accept that these voices you're used to have been wrong about why our economy is collapsing and what we'd need to do to fix it.

Interest rates, and all these other popular catch-phrases are the consequences of falling wages and our problems, not the cause of them. Think about it. Well, that may be too deep for many. But I'll just say it again. Most of the "problems" that are identified, from immoral, if not criminal mortgage practices, to rapacious credit practices, to interest rates are the CONSEQUENCES of 30 years of declining wages. It's cause and effect.

So keep on believing that following Cenk's lead is the right path, while ignoring the big elephant in the room.

This, of course, is one of the reason we're in this mess. People who can't seem to understand what's going on, and thus do something about it. American's have been sold a bill of goods, and we went along with it while they destroyed our country. And they're continuing to do it. Business as usual.

[ihavenobias]

14. (Sigh)

Maybe you missed it, but I listen to Hartmann just as much as I listen to TYT, hence the monthly membership. So the "deluding yourself with the rhetoric you've been fed" line is incorrect (and a bit insulting and amusing). I also read other opinions, like that Infinite Debt piece you didn't bother to read.

Have a good night.

[530jonathan]

7. I agree

wholeheartedly, except for one issue... If you instantly doubled the minimum wage across the board, wouldn't that also force manufacturing jobs to relocate overseas or to mexico? for instance, maybe a company who builds truck chassis... Obviously they would have more than a few skilled workers making a decent wage, but i guarantee they have more than a few porters, stock people, and other jobs like that requiring not much more or only minimum wage. If it was suddenly mandated overnight that this 30 person company had to double the wages of 10 of their employees, their bottom line would suffer considerably. And no i dont build trucks, I work on newer VWs ;)

[cufford]

12. The other half of the equation

As Thom Hartmann has pointed out numerous times, and I'm paraphrasing, you can more than offset a modest increase in labor costs through a small increase in retail price. But with people now able to afford to pay those slightly higher prices.

It's better to have a nation of people who can afford to pay a little more for something, than a nation of those who can't afford even the cheapest stuff.

My comment about doubling the minimum wage today is admittedly an overly simplistic statement. But I was only trying to make the case that if most of our current minimum wage jobs paid twice as much, it would make a huge deal in this country. Everyday people, tens of millions of them would be bringing home twice the income as they are now. They could pay their rent and utilities, and even buy stuff. Go out to eat, go to the movies, but a new T.V or make car payments on a new car. All this consumption would lead more jobs to supply the nation with it's consumption needs. It's a very positive, growing cycle.

But of course you can't just change things over night and expect it all to be hunky dory. It took 30 years to get us to this point, and it would take just as long to turn it around, if we were at least trying.

Mandating a higher minimum wage would have to be done in tandem with trade policy revisions, increased tarrifs so that jobs couldn't continue to be outsourced. You'd have to do a lot of things, and it would take a long time.

Higher wages would cause employers to have to raise their prices slightly, but then you'd have consumers who could actually afford them. It's a win-win. And we could give all small employers a tax break for a few years to help compensate for the higher minimum wage.

So raising wages isn't a show-stopper. That's just what this whole "supply side" "trickle-down" nonsense says. But it's not true. Higher labor costs actually benefit the system. Because it puts money in the pockets of everyday Americans, and they can now pay their bills, and buy things...consume! Workers are customers. When you reduce their pay to minimum wage, they're no longer customers. Raise their pay and people can pay their rent, and property taxes get paid. All the new spending generates lots of sales tax, and the higher wages, income taxes too. So our local governments can afford to fix the roads again, and hire good teachers and buy books for our public schools, and build new ones.

There's just so much positive that comes out of paying workers not just a living wage, but a good living wage. Prosperity for the country results.

But this "gotta get labor costs down to compete on the world market" is utter BS. Just the propaganda that was used, and continues to be used to convince people that giving corporations free pass to fire their American workers, bust unions and eliminate those time-honored benefits and retirement plans, is a good thing.

Everyday people, the great masses of our country, with money in their pockets to spend is what drives our economy. Money in the investment savings accounts of the wealthy CEO's contributes nothing to the economy.

This is exactly what we're seeing today. After an unprecedented transfer of the country's wealth, the money, from a huge and prosperous middle class, to the very small, elite ultra-rich segment, has devastated our economy. They took all the money from our pockets, and consumer spending is not just flat, but dying. The economy is collapsing, and will continue to do so.

We have to start driving wages back up to fix this, and however you go about doing that. It's just what matters. What makes this economy go round.

Going after bankers who trade derivatives isn't going to do crap for us in the big picture. Save that for next on the list. Put money back people's pockets first, and that happens with good wages.

[jgraz]

5. Nothing super radical here

Unless, of course, you're a member of Obama's economic team. :banghead:

[ProfessorPlum]

16. Excellent comment. Unfortunately.

[pleah]

6. K&R

[LeftHandPath]

8. My 5 steps...

1. Enforce the current regulations, end the fraud in home mortgage industry and punish those who perpetrated fraud, including those who lied on mortgage applications.
2. Restore Glass-Steigal and break up the banking monopolies.
3. Make it illegal to write Credit Default Swaps without margins, reserves to meet a default, and an open exchange with daily mark to market.
4. End all off balance sheet (ENRON) holdings, and make all assets marked to market daily. No exceptions. If your mark falls below your margin, pay up or liquify.
5. Update the Federal Reserve act with 'or else' language to include prison terms for violation of the act, or purchases of assets outside of its rules.

[Turborama]

9. K&R thanks for posting n/t

[theFrankFactor]

15. Important Contributions to a Complex Issue! K&R

[20score]

17. Very good rules. K&R

[Kajsa]

18. K & R!

:kick: