1 billion

On May 6th, the Associated Press reported that, according to the U.N. food aid organization, "The number of hungry people in the world could soon hit a record 1 billion, despite a recent drop in food prices."

What a truly depressing statistic. In fact, it's statistics like this that have made me lose faith in the ability of capitalism to ever address the needs of humanity. With all of the wealth and resources at our disposal, it's a travesty that so many people are going hungry; and with the focus of production always on profit rather than need, it's a travesty that will continue for the foreseeable future.

in the news today (5/8/09)

There's a lot of interesting stories in the news today, which I happened to have time to read at Chez Machin, a lovely little place on SE Hawthorne in Portland, during lunch. (I recommend their breakfast special w/coffee and creme brulee.)

One of the headlines is President Obama's new budget proposal. On Thursday, Obama sent Congress a detailed budget outlining various cuts in funding for certain programs while increasing it for others. While I agree with some of his decisions, I disagree with him on others.

Of the proposals that I agree with, one is his plan to end $26 billion in oil and gas industry tax breaks," which he called "unjustifiable loopholes" in the tax system that other industries do not get (Obama touts $17 billion 'lot of money' budget cuts). I think the reasons why this is a good thing are self-explanatory.

His proposals to (1) eliminate federal support for a $35 million-a-year radio-based marine navigation system rendered obsolete by the satellite-based Global Positioning System, (2) increase child nutrition programs by $1 billion, (3) set up a $1 billion program to develop or rehabilitate housing for the poor and (4) stop paying states and counties that keep illegal immigrants in their jails also seem like good ideas.

Of the proposals that I disagree with, the main ones are his plan to slash the benefits program for families of slain police and safety officers from $110 million to $60 million and his plan to put $2 billion more into merit-based teacher pay.

The reason for the latter is that while it sounds like a good idea to pay well-performing teachers more, the main criteria for judging teacher performance under No Child Left Behind is standardized testing. This essentially means that teachers are being rewarded more for "teaching to the test" than quality teaching, which ultimately undermines the quality of teaching (especially in reading and math) and leads to a potential decline in the teaching of higher-order thinking (No Child Left Behind's Emphasis on 'Teaching to the Test' Undermines Quality Teaching).

I'm also not happy with his plan to scrap a $142 million program to help states pay to clean up abandoned mines.

Another big story concerns Speaker Pelosi and the newly released report issued by the Office of the Director of National Intelligence and the Central Intelligence Agency.

According to the Washington Post, the report says that Pelosi was "briefed in September 2002 about the use of harsh interrogation tactics against al-Qaeda suspects, seeming to contradict her repeated statements that she was never told the techniques were actually being used." The memo notes that the Pelosi-Goss briefing apparently covered "EITs [enhanced interrogation technique] including the use of EITs" on Abu Zubaida.

Looks like Speaker Pelosi isn't going to be able to sweep this issue under the rug anytime soon.

In economic news, the Associated Press reports that:

The Labor Department reported Thursday that the number newly laid off workers applying for benefits dropped to 601,000 last week. That was far better than the rise to 635,000 claims that economists expected.

But the total number of people receiving jobless benefits climbed to 6.35 million, a 14th straight record.

The four-week moving average of initial jobless claims, which smooths out volatility, totaled 623,500 last week, a decrease of more than 30,000 from the high in early April. Goldman Sachs economists have said a decline of 30,000 to 40,000 in the four-week average is needed to signal a peak.

Meanwhile, retailers' business last month was helped by warmer weather, tax refunds, and a shift in the Easter holiday, helping Wal-Mart and many mall clothing chains post better-than-expected results.

But consumer sentiment and business in many areas remains weak, and analysts expect a drawn-out recovery as unemployment remains high and other economic woes persist. Warehouse store operator Costco Wholesale Corp. reported a deeper-than-expected same-store sales drop, hurt by the closing of its stores on Easter.

In a separate report, the government said that productivity, the key ingredient to rising living standards, grew at a 0.8 percent annual rate in the January-March quarter, slightly better than the 0.6 percent increase that economists had expected. Wage pressures, as measured by unit labor costs, increased at a 3.3 percent rate, down from a 5.7 percent spike in the fourth quarter.

While wage pressures outpacing productivity normally would raise alarm bells about inflation, the threat of any price spikes is seen as remote. Regulators and economists are not worried about inflation since many workers are more concerned about keeping their jobs in the recession than demanding higher wages.

Hmm. Inflation sucks, but I'm not sure that the fact workers are too afraid to demand higher wages — even though weekly wages are said to be below levels achieved in the 60s when adjusted for inflation — is a good thing. To me, this illustrates the glaring lack of worker protection and job security more than anything else.

Also being reported is the public release of the government's stress test findings. According to the Oregonian, Federal regulators "ordered 10 of the nation's 19 largest banks to raise a total of $75 billion in new capital to ensure their survival should the economic downturn worsen." Unfortunately, the Oregonian also noted that, "For consumers, the results could mean it will be even harder to borrow during the next 18 months."

I seem to remember that the original purpose of the government's $700 billion bailout of the financial sector, which funnelled massive amounts of tax-payer money to the major banks while slashing interest rates, was to stimulate more lending. So now we're being told that not only has the government's $700 billion bailout failed to unfreeze the credit market and stimulate lending, but its new stress test results and subsequent new capital requirements will make it even harder to borrow in the next 18 months!

What in the hell are these people doing? Who are they really trying to help? Why aren't we doing more about it like firing our banks and putting our money into local credit unions?

Finally, I read three interesting letters to the editor in today's Oregonian. The first is an open letter to President Obama by G.R. Johnson:

As a parent and grandparent, I urgently suggest that you prepare a special address to the high school seniors in the graduating Class of 2009. The purpose would be twofold:

First, to review that each student's share of the national debt is $36,667 and rising, according to statements by the GAO, the OMB and U.S. Budget Watch. Add in $56 trillion for the unfunded entitlements (Social Security, Medicare, etc.) and you get a total commitment of $67.2 trillion, or $220,409 per person, including around 33 million kids under the age of 18.

Second, to explain the ethical and moral considerations that justify borrowing several trillion dollars from future generations without their approval and without advising them how the magnitude of this debt will impact their entire lives.

I hope you will agree that it is a matter of honor and decency that these questions are answered by those who authorized borrowing at a rate never before seen in our history. It would seem you would welcome the opportunity to explain these things to those who will be burdened with the payments for as long as they live.

The second is by DR. Herman M. Frankel concerning H.R. 676:

It's refreshing to read the truth!

"A public plan would drive private insurance companies of out of business," ("Health Secretary: No single-payer plan," May 7, Page A7).

Exactly. Private insurance companies are in the business of generating earnings by standing between patients and their doctors. Too often, they obstruct access and decrease quality by preventing patients from seeing their doctors (through exclusions, high co-pays and deductibles, and low annual maximums), withholding approval for needed medical tests or procedures and delaying or denying payment.

Is this why so many Americans and a many practicing physicians favor the single-payer program described in H.R. 676, the bill introduced by Rep. John Conyers (D-Mich.), and 75 co-sponsors, the U.S. Conference of Mayors, the Oregon AFL-CIO, 38 other state AFL-CIOs, and more than 450 other union organizations, including 20 Oregon unions, and more than 40 state, county, and city governments?

And last but not least, the third is about America's "awful moral turning" since WW II by Chuck Hillestad:

Looks like the creators and promoters of our American torture chambers get to escape punishment after all. Our grandfathers and fathers who died in WWII must be turning over in their graves. They gave their lives to protect us from the Nazis and we ended up not just using Nazi techniques, but justifying their use.

How did the Greatest Generation manage to spawn the Worst Generation?

see ya, steph

From the USA Today:

Stephen Friedman, chairman of the board of the Federal Reserve Bank of New York, resigned Thursday, over questions about his ties to financial powerhouse Goldman Sachs.

In a letter to Fed officials, Friedman said, "Today, although I have been in compliance with the rules, my public service motivated continuation on the Reserve Bank Board is being mischaracterized as improper. The Federal Reserve System has important work to do and does not need this distraction."

Earlier this week, The Wall Street Journal raised questions about the influence of Goldman Sachs, whose board Friedman sits on, in shaping Washington's response to the financial crisis.

"The Federal Reserve Bank of New York shaped Washington's response to the financial crisis late last year, which buoyed Goldman Sachs Group Inc. and other Wall Street firms. Goldman received speedy approval to become a bank holding company in September and a $10 billion capital injection soon after.

"During that time, the New York Fed's chairman, Stephen Friedman, sat on Goldman's board and had a large holding in Goldman stock, which because of Goldman's new status as a bank holding company was a violation of Federal Reserve policy," the Journal story said.

Cheers to the Wall Street Journal, among others, for bringing up the potential conflict of interest posed by New York Federal Reserve Chairman Stephen Friedman's relationship with Goldman Sachs, forcing him to resign.

can anyone say 'police state'?

Apparently, the Patriot Act is now being used to arrest and detain minors without due process of law according to a WRAL 5 News report. Constitution? What's that?

way to go, maine and new hampshire!

From the Boston Globe:

Maine and New Hampshire took steps toward the approval of gay marriage today, bringing to five the number of New England states that have moved to legalize marriage between same-sex couples in the past five years.

Governor John E. Baldacci of Maine became the first governor in the country to sign a gay marriage bill into law without being spurred to action by a court decision. In New Hampshire, legislators took the last of several votes approving a gay marriage law. Governor John Lynch, a Democrat like Baldacci, will have five days to veto the bill, sign it, or let it become law without his signature.

Way to go, Maine and New Hampshire!

seriously, merck?

Merck Makes Phony Peer-Review Journal

First, you make a hit list of doctors who had to be "neutralised" or discredited because they criticised your anti-arthritis drug, and now this? Are you fucking kidding me?

Why is this company still around?

re: another one bites the dust

My friend, Chris, comments:

You can't rely on manufacturing to save us when you are off shoring our manufacturing. The auto industry is simply the last area that hasn't entirely gone out of this country. Oh sure we may have toilet paper factories here and there, but they don't add up as much as you'd think. How much of that do we export? We lost our worth in the world economy by "switching over" to a service based economy instead of a product based economy. Too bad we off shore that too. So what do we have? Nothing. Even the IRS's 800 support line is in India. Fixing the auto industry is both good and bad in a sense that you can put a patch on it to stop the bleeding with funds, but will it help in the long run if we don't bring back what we've lost already in other industries? Think about how much is stamped with "Made in ..". So what do we do? Take a card from the socialists and let government intervene everywhere? A big pill to swallow, because how do we assure ourselves that those in DC aren't the same ones who made the decisions to off shore to begin with? It isn't a political party thing, it's a money thing.

My response:

Exactly. China is now one the world's manufacturing giants. Just look at the steel industry, for example. We used to be the world's largest producer of steel, now, according to the International Iron and Steel Institute, China is currently the leading producer while we are fourth in terms of metric tonnes. India is quickly becoming one of the new IT giants. The United States has very little left in the way of manufacturing and exports besides things like subsidized corn, which, thanks to NAFTA, we dump off in places like Mexico. The real question is, as you have already pointed out, What do we do?

One of the main problems I see is the fact that U.S. based multinational corporations are beyond borders. They can pack up and ship their capital and resources, like manufacturing and tech support, to almost anywhere in the world with cheaper wages and and lower taxes while still technically being headquartered in the U.S. One thing we need to do is to make this more difficult, otherwise there won't be anything left to outsource. It may be good for a company's profit margins, but it is devastating to our economy as a whole.

You posed the question of whether we should take a card from the socialists and let the government intervene everywhere, and then rightly pointed out that the very people in DC are quite possibly the ones who made is easier for domestic companies to offshore production to begin with. That is why I think a better solution is to give the workers a bigger voice in the decision-making process and more power in the work place, which is real socialism. The reason is that the workers themselves benefit by having manufacturing and other product based jobs stay here. CEOs and shareholders, on the other hand, generally get paid big bucks no matter where the jobs are located, and even benefit more when they are able to ship them offshore where wages and taxes are considerably lower.

I am not a big fan of all organized labour, and I think that many unions have become just as corrupt and greedy as any board of directors, but without greater government involvement or worker participation in the decision-making process we are never going to keep the jobs we still have or get the ones we lost back. Unless, of course, the U.S., becomes more like a developing nation than a developed one, with high rates of unemployment, and the jobs get shipped back here due to the massive pool of cheap labour and lower taxes, which will mean things like our quality of life and social safety nets like Medicaid and Medicare, Social Security, unemployment etc. will take even more of a beating.