GM Chrylsler -- administration has largely ignored one of the biggest factors making them uncompetitive - the exchange rate.

An Industrial Renaissance Policy | OurFuture.org

For years Larry Summers and I had a running argument over industrial policy.

As a mainstream economist in good standing, he, of course argued that governments can't pick winners and losers and that even if it could, special interests would inevitably capture the process and distort it. Under no circumstances, he emphasized, should America have an industrial policy.

My view was that as an industrial nation we would inevitably make decisions that involved picking winners and losers. Breaking up AT&T, standards setting by the FCC or FDA, R&D spending by N.I.H, etc. are all examples of such decisions. The only question was and is whether those decisions would be guided by some overall productivity optimizing criteria or by chance or, more likely, the very special interests Larry feared.

Well, now that the U.S. government owns the banks, insurance, and auto companies with Larry as the chief winner and loser picker, that whole discussion has become moot.

But now that we are picking winners and losers, the question of how we are doing it has become very important. So far, the answer is "not very well."

While pouring big bucks into GM and Chrysler to keep them alive, the administration has largely ignored one of the biggest factors making them uncompetitive - the exchange rate. The strong dollar and the policies of China, Japan, Korea and others to undervalue their currencies tend to undercut the rescue effort. Industrial policy will only work if it is a complete policy, and a complete policy in this case must be one that deals with the exchange rate question. ...

our lawmakers is to make it easier for payday lenders, by capping their interest rates at a meager 391%.

News > Politics > Payday Lending/Rape

Payday lending works like this: Some poor sap has a job and a bank account and she can’t cover his bills for the month. She’s just a bit behind on the rent or her gas bill and she needs an advance on her paycheck. ...

So, she goes to the payday lender.

Once there, she opens a line of credit. The lender agrees to give her an advance on her next paycheck and she in turn writes a check from her bank account for that amount, to the payday lender. It’s post dated and the lender agrees not to cash the check until lady’s payday. Oh, and there’s a massive fee, typically around $17 for every $100. For one payday loan, that’s not much. But it never ends there. Oh, and they don’t have to pay that fee until their next paycheck. That, of course, causes a problem on the day they get their next paycheck. It’s literally built as a trap. ...

These people become sharecroppers on their own life, giving the lender a never-ending share of their future earnings. Seventy-five percent of borrowers roll their loans over to the next week. The average borrower will pay $500 in fees for a $300 loan. Annual interest rates for payday loans average over 400 %. Consider the fees charged by one payday lender in DC as reported by The Washington Post:

If you qualify, the fee for borrowing $300 is $46.50. That was not for a year -- it's for seven days, although the terms can vary. How much interest will this payday loan cost you? In simple terms, the company is charging a $15.50 fee for every $100 that you borrow. On your $300 payday loan -- borrowed for a term of seven days -- the effective annual percentage rate is 806 percent.

Today America is chock full of payday lenders. It’s one of the fastest growing businesses in the USA. It’s a $40 billion industry. There are now over 22,000 payday lenders serving over 10 million Americans. Of course, those 10 million Americans are the working poor, the ones who can least afford a 911% interest loan. Many of them feel they have no choice but to take out a loan. That’s why all the payday lenders are in the worst part of town. They are predators, seeking out the weak
...
At this time, with our distribution of wealth completely out of whack, when our usury laws need to be changed to give the poor a chance and bring stability back to our country and resurrect our manufacturing base, the response of our lawmakers is to make it easier for payday lenders, by capping their interest rates at a meager 391%.

As I said last week, we are doomed. ...

If you create a debt society by allowing insane interest rates, capital is removed from manufacturing and small business.

News > Politics > Why You Hatin’ On Babylon?
...
Our usury laws are insane. Our usury laws drove us into debt, sped up the loss of our manufacturing base and have directly led to the murder of the middle class. And it’s only going to get worse. The looming credit card crisis will be the next shoe to drop and with deflation a serious threat, shockingly heinous and fluctuating interest rates will make it impossible for many to get by. Even ancient Babylon had laws against the shit we allow lenders to get away with.

Usury:

1: interest
2: the lending of money with an interest charge for its use, especially: the lending of money at exorbitant interest rates.
3: an unconscionable or exorbitant rate or amount of interest; specifically: interest in excess of a legal rate charged to a borrower for the use of money.

Quite a few successful ancient empires considered usury to be worse than murder and it was punished accordingly. We, because we are an incredibly wise country, decided to toss out centuries of law and tradition. First in the early 1900’s, we began to gut our usury laws and then under Jimmy Carter they were fully disemboweled. It’s not like we didn’t have a time period to look back on and see what would happen.

800-600 B.C.
The Greeks at first regulate interest, and then deregulate it. After deregulation, there was so much unregulated debt that Athenians were sold into slavery and threatened revolt.

Slavery. Totally different from working endless hours at a job just to pay back a bank. Well, I say pay back a bank, but the amount borrowed has already been paid off tenfold. In reality, the average Joe in debt is paying off interest and more interest and more interest. It’s debt slavery and America is kicking ass.

Old Testament
The Prophet Ezekiel includes usury in a list of “abominable things,” along with rape, murder, robbery and idolatry. Ezekiel 18:19-13.

1750 B.C.
The Code of Hammurabi regulates the interest that can be charged on a loan. Historical records indicate that many loans were made below the legal limit.

What Hammurabi and Ezekiel knew, Americans certainly do not. It’s pretty simple. If you create a debt society by allowing insane interest rates, capital is removed from manufacturing and small business. It all gets pumped into the banks and everything is then out of balance. And it’s not just the money, the top minds head into the financial world, spurning the areas where society needs them, like manufacturing. Eventually it all collapses on itself. Welcome to America.

443 B.C.
The Romans adopt the “Twelve Tables” and cap interest at 8 1/3%

America has become a bunch of clowns scraping by to pay off the financial sector. We are waiters, Wal-mart workers, gas station attendants and Starbucks coffee makers, but overall, the “Financial services sector” employs most Americans directly or indirectly. We have a society built on loans. We are eating ourselves. First we started with our hands, then our arms, our legs and now we are getting into the organs. I just ate my kidneys. Not bad, I suggest grilling.

11th century
In England, the taking of any interest at all is punishable by taking the usurer’s land and chattels.

Now that we have gotten rid of laborers and turned unions into our society’s villains, we are obviously much better off. In 2002 and 2003, the financial sector took in more than "40% of the profits that accrued to US corporations." That’s good right? In 1988 it was half that – because interest rates were relatively normal.
...

Medieval Roman Law
Usurer’s are fined 4X the amount taken, while robbery is penalized at twice the amount taken.

The '70s are when we decided to toss our usury laws aside and rape each other at will. The big case that turned everything upside down was Marquette National Bank v. First of Omaha Service Corp. in 1978. Before that horrible Supreme Court decision, states could set their own interest rate caps. The court ruled that banks could set their rates based on the state “where the bank is located.” No mas. Good bye interest rates under 10%. It was the wild west as far as credit card companies were concerned and we were all victims about to be fed to the pigs in Deadwood.

1570
During the Reign of Queen Elizabeth, interest rates in England are limited to under 10%. This law lasts until 1854.

Early 18th Century
American colonies adopt usury laws, setting the interest cap at 8%.

The bestest thing of all is how the banks weren’t satisfied with insane interest rates that would have led to their execution back in the day. No, they also had to go with huge overdraft fees, ATM fees, transfer fees, and on and on. And we let them. ...

After 1776
All of the States in the Union adopt a general usury. Most states set the interest limit at 6%.
...
Next week, I’ll cover payday loans, which is actually 100 times worse than credit cards.

Capitalism Produces Rich Bankers, but Socialism Produces Happiness | CommonDreams.org

Capitalism Produces Rich Bankers, but Socialism Produces Happiness | CommonDreams.org

Socialism is better than capitalism. So say 20 percent of Americans, and another 27 percent say they can't say which is better, according to an April 9 Rasmussen poll.

There's hope. ...

No less a "capitalist tool" than Forbes Magazine let a red cat out of the bag with a report this month that the happiest countries tend to be Scandinavian socialist democracies. High per-capita GDP certainly plays a role in their felicity, but even social democratic New Zealand, with per-capita GDP only 64 percent of the United States', ranks with the 10 democracies above us in the happiness index. They pay high taxes in these pinkotopias, but folks enjoy entitlements like free college, extensive elder care, and 52-week paid maternity leave.

... For example, our Auto Industry Task Force just bankrupted GM and Chrysler, fired tens of thousands of employees, extorted immense sacrifices from active and retired autoworkers, and is dominated by the investment bankers who absorbed trillions in national wealth to keep themselves rich after destroying the economy.

Instead of seizing plants as our Canadian comrades are doing, or adding "bossnapping" to plant occupations as the French have done, we shake our heads as the union negotiates the terms of surrender. ...

Computing and mathematical jobs .. down 9.3%, Engineering ... sown 10.3% [solution: more H1B to address talent shortage ?!]

The Daily Dish | By Andrew Sullivan | 19 May 2009 01:23 pm

Recession Comes to the Professionals

by Richard Florida

Business Week's Michael Mandel crunches the numbers and turns up some disturbing results. While recession has hit hardest at blue-collar workers, it is taking its toll on professional jobs as well. Unemployment for professionals overall increased by roughly four percent between August 2008 and April 2009. But the recession is hitting much harder at certain types of professionals. Computing and mathematical jobs (heavy on software engineers, computer scientists, and systems analysts) are down 9.3 percent; engineering and architectural jobs (two-thirds engineering) are down 10.3 percent; and "creative professional" jobs - working artists, musicians, dancers, entertainers, reporters, editors, writers, and other media types - are down 11.3 percent.

The Daily Dish | By Andrew Sullivan

The Daily Dish | By Andrew Sullivan | 19 May 2009 02:31 pm

Boom/Bust

by Richard Florida

Mark Thoma points to San Francisco Fed research on the lasting effects of the past decade's run-up in consumer debt and current "deleveraging" on the U.S. economy and American consumers.

U.S. household leverage, as measured by the ratio of debt to personal disposable income, increased modestly from 55% in 1960 to 65% by the mid-1980s. Then, over the next two decades, leverage proceeded to more than double, reaching an all-time high of 133% in 2007. That dramatic rise in debt was accompanied by a steady decline in the personal saving rate. The combination of higher debt and lower saving enabled personal consumption expenditures to grow faster than disposable income, providing a significant boost to U.S. economic growth over the period.

In the long-run, however, consumption cannot grow faster than income because there is an upper limit to how much debt households can service, based on their incomes.

Obama says financial sector to shrink | Reuters

Obama says financial sector to shrink | Reuters

WASHINGTON (Reuters) - The financial sector will make up a smaller part of the U.S. economy in the future as new regulations clamp down on "massive risk-taking," President Barack Obama said in an interview published on Saturday.

Obama, whose young administration has spearheaded a raft of reforms in the banking sector as part of efforts to tackle the financial crisis, said the industry's role in the United States would look different at the end of the current recession.

"What I think will change, what I think was an aberration, was a situation where corporate profits in the financial sector were such a heavy part of our overall profitability over the last decade," he said told the New York Times Magazine.

"Part of that has to do with the effects of regulation that will inhibit some of the massive leveraging and the massive risk-taking that had become so common."

Obama said some of the job-seekers who may normally have gone to the financial sector would shift to other areas of the economy, such as engineering. ...

24,700,000 Unemployed or Underemployed Americans: Job Losses Accelerate with 6 million unemployed over last year. Real Unemployment rate now at 15.8

24,700,000 Unemployed or Underemployed Americans: Job Losses Accelerate with 6 million unemployed over last year. Real Unemployment rate now at 15.8 Percent.
...

The fact of the matter is, when we total up all of the unemployed and underemployed we find that close to 24,700,000 Americans fall in this category.

Over the past 12 months the number of unemployed has risen by 6 million. Also, if you look at the above chart, the rate has shot up by 3.9% from 5% last April of 2008 to the current 8.9%. Yet that rate is for those that are unemployed. When we start looking at the broader measure of U-6 we see that 15.8% of people are unemployed or underemployed. Let us break down the numbers:

Unemployed: 13,700,000

Part-time but looking for full-time: 8,900,000

Marginally Attached and Discouraged Workers: 2,100,000 ...

Banks Show Clout on Legislation to Help Consumers - NYTimes.com

Banks Show Clout on Legislation to Help Consumers - NYTimes.com

— They may be held in low esteem around the nation, but the country’s largest banks still wield considerable influence in Washington.

The banks have made it difficult for Congressional Democrats and the White House to give stretched homeowners a stronger hand in negotiating lower monthly payments on mortgages and to prevent credit card companies from imposing higher fees and interest rates.

Having won some early skirmishes by teaming with Republican allies, the banks now appear to have the upper hand and may wind up killing — or at least substantially diluting — both pro-consumer measures. ...

Elizabeth Warren: Stress Tests Need To Be Transparent Or They're Worthless

Elizabeth Warren: Stress Tests Need To Be Transparent Or They're Worthless
...
"If we don't see the details of the stress test, if we don't see the complete details of the stress test, there's a real possibility no one buys any of the outcomes," said Warren, who chairs the Congressional Oversight Panel, monitoring the Troubled Asset Relief Program. "And [if no one buys the results] then we are where we are today. We are in the same place that we are without the information from the stress tests."

In an interview with the Huffington Post, the Harvard Law School Professor laid down four markers for a stable and sufficient recovery, offered support for the prosecution of individuals proven to have committed crimes that contributed to the economic downturn, and criticized bank executives for their rising compensation levels. She also insisted that if Goldman Sachs wanted to pay back the bailout funds it received to get out from under government restrictions, it should have to return all funds, including guarantees and money it receives as a counterparty to AIG.
...
"I think there's a fundamental disconnect between bankers who think its business as usual and the public that believes that when banks use hundreds of billions of taxpayer dollars things should change," she said. "A lot of the people wanted to dismiss the consumer anger over AIG and say 'Oh it's just about a tiny little slice, it doesn't matter.'... And I think its much bigger than compensation, I think its much more powerful. I think many, many people have not yet grasped this, many of the experts, the so-called experts, have not grasped the significance [of this]." ...