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April 23, 2010

Will Lawmakers Avert The Next Financial Collapse?

(Photo by Robin Holland)

In this week's JOURNAL, Bill Moyers spoke with veteran regulator William K. Black about the proposed new financial reform legislation and the systemic problems that led to the economic collapse in 2008.

Black expressed disappointment with President Obama's speech on financial regulation this week, and said that the pervasive influence of Wall Street money and ideology has created what he calls a "criminogenic" environment:

"I was disappointed that [President Obama] wasn't willing to be blunt. He used a number of euphemisms, but he was unwilling to use the 'F word,' which is fraud in this. It's the word that explains why we have these recurrent, intensifying crises... A criminogenic environment is a steal from pathology - a pathogenic environment [is] one that spreads disease. In this case, it's an environment that spreads fraud... [The SEC] could have acted at any time to regulate all of these securities bankers to the extent that their problems had to do with mortgages, and they overwhelmingly caused by mortgages. They refused. They [and] the Fed refused to use that authority... There wasn't going to be significant reform or significant crackdowns in the financial sphere because the leading source of contributions to the Obama candidacy and the McCain candidacy was the financial industry... It's deeply criminogenic. And this ideology that both parties are dominated by says 'No, big corporations wouldn't cheat. Fraud can't happen. The market's automatically excluded.' It's insane. It's been falsified for 25 years by event after event here and abroad."

What do you think?

  • Black says that both Republicans and Democrats subscribe to an ideology that encourages financial fraud. Do you agree? Why or why not?

  • If government officials did not enforce regulation that was already on the books, do you think the new regulations being proposed in Washington will help prevent further economic disasters?

  • Do you expect lawmakers to act responsibly to prevent the next collapse? How are you working to encourage them?

  • April 16, 2010

    Financial Regulation & Regulatory Capture

    (Photos by Robin Holland)

    This week on the JOURNAL, Bill Moyers spoke with financial experts Simon Johnson and James Kwak about Wall Street's influence in Washington and their support for new financial regulation that might reduce the banks' power.

    James Kwak explained why he and Johnson advocate for more financial regulation, including breaking up America's largest banks:

    "It used to be maybe eight or nine banks. But what's happened over the last two years is that these banks have gotten bigger, because they've bought each other. They've become more powerful. And they have an even stronger market position in some key markets like credit cards, mortgages, equity underwriting, and derivatives. And when we talk about the problem, when we talk about the need to break up these banks, we're really just talking about six banks, which are pretty undebatably too big to fail and therefore have an enormous amount of leverage over the government... What we learned in 2008 were certain institutions are so big and so interconnected that if they were to fail, they would cause systemic shocks throughout the economy. That's essentially what happened in September 2008 when Lehman Brothers collapsed... Almost two years later, nothing has changed. Or the only change is that these banks have gotten larger, more powerful, both economically and politically. And they've been flexing their muscles in Washington for the last year and a half."

    Bill Moyers asked why new financial regulations would work when past efforts at reform have ultimately failed:

    "Over the course of my lifetime, and my working career as a journalist, I've seen one regulatory agency after another taken over by the very industries they were supposed to regulate. Regulation requires a President who is committed to tough regulation. If you get a free market President like George W. Bush, you get regulation serving the industry... If you get a Democratic Party that's been compromised by its concessions and capitulations and contributions from Wall Street, you get a regulatory system that is a joke, and that's what we have. What's to ensure that the next regulatory system won't be a joke?"

    Simon Johnson replied:

    "The person who nailed this intellectually a long time ago was from the University of Chicago. George Stigler, not a man of the left, got a Nobel Prize [for concluding that] all industries end up with the industry capturing the regulators. What's happened to us is exactly what Stigler warned against, on a massive scale. The Administration still argues that we should delegate responsibility, going forward, for lots of things around finance - like how much capital you should have - delegate that to the regulators... Now that's crazy. That's not acceptable. That's not what they should do, particularly because any Democrat should say 'well, wait a minute, the next free market president who doesn't believe in regulation [that] comes in will gut the system.' And any person from the right who's read Stigler should say 'well, those regulators are just gonna get captured.' You've got to put it in legislation. You've got to design the legislation. You've got to go after the things that can be legislated. Congress must not abdicate this responsibility."

    What do you think?

  • Can the government set up a regulatory system that won't end up controlled by Wall Street? Why or why not?

  • How can ordinary citizens take action to retake our democracy from the clutches of Big Finance?

  • March 26, 2010

    Can Washington Rein In Wall Street?

    (Photo by Robin Holland)

    In this week's JOURNAL, Bill Moyers spoke with financial journalist Gretchen Morgenson about the financial reform legislation that lawmakers are crafting in Washington.

    Morgenson said that the proposals she's seen have been insufficient to rein in many of the Wall Street abuses that helped bring on the economic meltdown.

    "I think that the bills we have seen have been so half-baked and really do not address some of the crucial elements of reform that are needed if we want to prevent this kind of crisis from happening again... We are nowhere closer to any kind of technique [or] strategy to prevent that kind of behemoth from growing again... I myself have been stunned watching the brazenness with which [the bankers] are willing to operate now - just swaggering about town, throwing money at their problem, throwing money at legislators to make sure they don't have to face a formidable regulatory framework... They take the gains when their stock is rising, when their companies are profitable, but when they get into trouble, you socialize the losses. The taxpayer has to pay them. We have rewarded this kind of dysfunctional behavior... It wasn't that we needed more regulation. We needed regulators with an appetite to regulate. We had plenty of regulations on the books about mortgages, products, practices, [but] no one was enforcing it."

    What do you think?

  • Do you believe that Washington lawmakers will create legislation that seriously tackles financial abuses from Wall Street?

  • What specifically would you like the legislation to address?

  • How can citizens take action to encourage regulators to actually regulate?

  • January 8, 2010

    Complex Issues & Public Outrage

    (Photos by Robin Holland)

    This week on the JOURNAL, Bill Moyers spoke with two journalists from the progressive magazine MOTHER JONES about Wall Street’s power over Washington and why the public isn’t demanding more regulation of institutions that contributed to the economic meltdown.

    Political blogger Kevin Drum argued that laws concerning financial regulation need to be simplified and that the press doesn’t do enough to ensure that Americans are informed about Wall Street’s power.

    “It’s not that American bankers are greedier than anybody else’s bankers. It’s that our laws allow them to do things they can’t do everywhere else. We let them take advantage of the system... This stuff is very, very complex, and that is exactly the reason why you need simple rules to rein it in. Because the more complexity you have, the more loopholes there are, the more you can take advantage... One place where I think we should lay some of the blame is the media and the financial media... [The issue] is sort of down in the weeds, and it gets no attention... People don’t see it enough to get angry about it. You can’t get angry about something unless you’re told about it.”

    David Corn, MOTHER JONES’ Washington bureau chief, suggested that reforms are necessary but that the details of financial regulation may be simply too complex for the mass public to comprehend or make into an urgent political issue.

    “Ultimately, this is about knowledge. This is about information. This stuff is really complicated and convoluted. Try reading any one of these bills and figuring out what’s actually being said... It’s mystifying. These guys who know the rules – they know the language, they have the access, and they’re giving contributions to the people writing the rules – have all the advantages... A Democratic pollster told me, ‘Listen, if 99 percent of Americans can’t understand derivatives, you can’t regulate derivatives in our Democratic process.’ I think there’s a lot of truth to that; people have to understand it. If only the people who benefit from them understand what’s going on, they have the leg up, and there’s no way for average citizens to even enter the process.”

    What do you think?

  • Is financial regulation too complex an issue for the general public to mobilize around? Why or why not?

  • Would you like to see President Obama rally grassroots support for more financial regulation? If so, what measures would you like to see him pursue?

  • From National People’s Action to tea parties, many Americans are getting organized around issues of Big Business and Big Government. How are you and your community working for reform?

  • December 18, 2009

    Michael Winship: Happy Holidays from America's Banks

    (Photo by Robin Holland)

    Below is an article by JOURNAL senior writer Michael Winship. We welcome your comments below.

    "Happy Holidays from America’s Banks"
    By Michael Winship

    Never mind Barack Obama’s Audacity of Hope. It’s the audacity of the banks that takes your breath away. Mean old Mr. Potter in IT’S A WONDERFUL LIFE seems like Father Christmas by comparison.

    A recent report that Citigroup and Goldman Sachs may have received preferential treatment getting doses of the swine flu vaccine was enough to give Ebenezer Scrooge the yips. Then came news that in order for us to get back the taxpayer bailout money we loaned them, Citigroup is receiving billions of dollars in tax breaks from the IRS.

    And there’s a new study this week, “Rewarding Failure,” from the public interest group Public Citizen, revealing that in the years leading up to the financial meltdown, the CEO’s of the 10 Wall Street giants that either collapsed or got huge amounts of TARP money were paid an average of $28.9 million dollars a year.

    In 2007, that amounted to 575 times the median income of an American family. Now, thanks in part to the banks’ monumental malfeasance that led to our economic swan dive, food stamps are now being used to feed one in eight Americans, and a quarter of all the kids in this country. A new poll from THE NEW YORK TIMES and CBS News reports that more than half of our unemployed have borrowed money from friends and relatives and have cut back on medical treatment. THE TIMES wrote that, “Joblessness has wreaked financial and emotional havoc on the lives of many of those out of work… causing major life changes, mental health issues and trouble maintaining even basic necessities.”

    Continue reading "Michael Winship: Happy Holidays from America's Banks" »

    October 30, 2009

    How Much Can the Government Do?

    (Photos by Robin Holland)

    This week, the JOURNAL featured wide-ranging conversations about America’s economy and William F. Buckley, Jr.’s contribution to the conservative movement.

    Both guests on the broadcast, liberal economist James K. Galbraith and conservative writer Richard Brookhiser, engaged a fundamental question that people have been debating for centuries and that cuts to the core of recent disputes about economic stimulus and health reform: how much is the government capable of doing?

    Galbraith argued that past federal programs have been successful and that the U.S. government should focus on creating more programs to pursue broad social goals:

    “There’s been a massive collapse, a collapse which is comparable in scale to 1930. The overall economy hasn’t come down nearly as much, and the reason for that is that we have the institutions that were created in the New Deal and the Great Society, institutions of the welfare state [and] social security... We need to set a strategic direction, as we did in the 1930s and 40s, when the strategic direction over 50 years was basically to create a middle class... When you’re focused on achieving a certain goal, you can eliminate poverty. You can deal with the environmental questions. You can, in fact, do this if you can sustain a course of policy for a 30 or 40 year period... The problem here is organizational. It’s a matter of will. It’s a matter of creating appropriate institutions that are in the public sector and incentives in the private sector to get certain jobs done.”

    Brookhiser said, however, that the conservative movement became increasingly influential in the 1960s as more and more Americans became skeptical of the federal government’s ability to tackle complex problems:

    “[During the 1960s] a post-Depression, post-war liberal consensus was finally beginning to come apart. World War II had been won, obviously, by an exertion of the government, and the Depression seemed to have been ended by the exertions of the government. There was a consensus that this was the way that we should address all our future problems, and that we could do it successfully by bringing the best thoughts and then the powers of the state to bear upon them. But, in the late 60s, for a lot of reasons – the war in Vietnam, racial troubles that the civil rights bills didn’t seem to be able to address – people all across the spectrum began having doubts, and many of them were on the right. That was really the moment the conservative criticisms of this consensus began to get traction.”

    Recent polling indicates that an increasing majority of Americans believe that the government is doing too much. According to Gallup, 57% of respondents agreed with the statement “the government is trying to do too many things that should be left to individuals and businesses,” the most in over a decade, while 51% said that “the federal government today has too much power.”

    What do you think?

  • How much is the federal government capable of doing competently? Explain.

  • Do you agree with poll respondents that the federal government is trying to do too much, and that it has too much power? Why or why not?

  • What is the appropriate role for government to serve, and what should be reserved for individuals and businesses?

  • October 9, 2009

    Wall Street vs. Reform?

    (Photos by Robin Holland)

    This week on the JOURNAL, Bill Moyers’ guests were one of Congress’ leading progressives, Rep. Marcy Kaptur (D-OH), and former IMF chief economist Simon Johnson, who shared their perspectives on Washington’s failure to reform the financial sector since last year’s economic catastrophe.

    While Kaptur and Johnson broadly agreed that Wall Street’s influence has stymied government efforts to rein in large banks and trace how several hundred billion dollars of bailout money has been spent, they differed over their interpretations of President Obama’s actions since taking office.

    Rep. Kaptur suggested that Obama is making an honest effort but is being misdirected by the wrong economic team:

    “Mr. Geithner came from the New York Fed, he came from Wall Street, and he becomes Secretary of the Treasury... You can go back decades and you will see that there’s this revolving door between Wall Street and Washington... I still have hope for President Obama and his wife Michelle. When Lincoln ran into trouble during the Civil War, he got new Generals. He brought in Grant. I hope that President Obama will bring in some new generals on the financial front. I don’t think any individuals who had their hands in creating this mess should be in charge of cleaning it up... I don’t think President Obama has the right people around him. The poor man inherited a total mess, globally and domestically. I think some of the people that he trusted haven’t delivered. He and his wife are extraordinarily intelligent people. I urge him to get new generals, it’s time.”

    Johnson, who noted his support for Obama’s presidential campaign, was skeptical of the argument that the President isn’t fully behind his Administration’s financial policy decisions.

    “President Obama campaigned on a message of change... I thought that the time for change, for the financial sector, was absolutely upon us... Rahm Emanuel, the President’s chief of staff, is widely known for saying ‘never let a good crisis go to waste.’ Well, the crisis is over. The crisis in the financial sector, not for people who own homes, but the crisis for the big banks is substantially over, and it was completely wasted. The Administration refused to break the power of the big banks when they had the opportunity earlier this year, and the regulatory reforms they are now pursuing will – in my opinion and I do follow this day to day – turn out to be essentially meaningless... Louis XIV of France was a very powerful monarch [who] was famous for having bad things happen under his rule, and people would say ‘If only Louis XIV knew, I’m sure he doesn’t know. If we could just tell him, he’d sort it out.’ I’m skeptical.”

    What do you think?

  • In your view, is President Obama making a serious effort to enact substantive financial reform? Do you agree more with Kaptur or Johnson’s interpretation of his actions thus far?

  • Has the Obama Administration’s handling of financial reform affected how you view its efforts on other issues, such as health care and environmental policy? Why or why not?

  • What financial reforms do you want to see Washington pursue? Explain.

    (For more from Simon Johnson, visit his blog at

  • Bill Moyers & Michael Winship: In Washington, Revolving Doors are Bad for Your Health

    Below is an article by Bill Moyers and JOURNAL senior writer Michael Winship. We welcome your comments below.

    "In Washington, Revolving Doors are Bad for Your Health"
    By Bill Moyers & Michael Winship

    On Tuesday, October 13, the Senate Finance Committee finally is scheduled to vote on its version of health care insurance reform. And therein lies yet another story in the endless saga of money and politics.

    In most polls, the majority of Americans favor a non-profit alternative -- like Medicare -- that would give the private health industry some competition. So if so many of us, including President Obama himself, want that public option, how come we're not getting one?

    Because the medicine that could cure our healthcare nightmare has been poisoned from Day One – fatally adulterated, thanks to the infamous, Washington revolving door. Movers and shakers rotate between government and the private sector at a speed so dizzying they forget for whom they’re supposed to be working.

    If you’ve been watching the Senate Finance Committee’s markup sessions, maybe you’ve noticed a woman sitting behind Committee Chairman Max Baucus. Her name is Liz Fowler.

    Fowler used to work for WellPoint, the largest health insurer in the country. She was its vice president of public policy. Baucus’ office failed to mention this in the press release announcing her appointment as senior counsel in February 2008, even though it went on at length about her expertise in “health care policy.”

    Now she’s working for the very committee with the most power to give her old company and the entire industry exactly what they want – higher profits – and no competition from alternative non-profit coverage that could lower costs and premiums.

    Continue reading "Bill Moyers & Michael Winship: In Washington, Revolving Doors are Bad for Your Health" »

    June 12, 2009

    Why Have The Rich Been Getting Richer?

    (Photo by Robin Holland)

    This week on the JOURNAL, Bill Moyers spoke with former Secretary of Labor Robert Reich about the power of Washington lobbyists and his vision for reforms to make America more prosperous and equitable.

    Reich lamented that the middle class has not shared the benefits of our nation’s economic expansion over the past few decades:

    “The fact of the matter is that, as late as 1980, the top 1 percent by income in the United States had about nine percent of total national income. But since then, you’ve had increasing concentration of income and wealth to the point that by 2007 the top 1 percent was taking home 21 percent of total national income. Now, when they’re taking home that much, the middle class doesn’t have enough purchasing power to keep the economy growing. That was hidden by the fact that they were borrowing so much on their homes, they kept on consuming because of their borrowing. But once that housing bubble exploded, it exposed the fact that the middle class in this country has really not participated in the growth of the economy, and over the long term we’re not gonna have a recovery until the middle class has the purchasing power it needs to buy again.”

    Economist Dieter Braeuninger of Deutsche Bank Research notes that, during the period Reich describes, many developed countries experienced similar increases in income inequality. Braeuninger suggests that technological advances and a surplus of unskilled labor are responsible for this trend:

    “Income inequality has risen in the industrialized world with skilled workers’ incomes rising faster than compensation for low-skilled labor... [Economists] identify the strong pace in technological progress and, in particular, the revolution in [information technology] as the engine of change. The triumphant advance of the microchip, the PC, and the internet kick-started a wave of automation, as well as a transition to flexible and accelerated production processes. This not only boosted productivity, but also resulted in a shift from labor-intensive to capital-intensive production methods. The winners are hence both owners of capital goods as well as the highly qualified labor force... The new technologies allow the replacement of less qualified labor through physical capital, such as machines and computers... The global labor force has risen fourfold since the early 1980s. The supply of basic labor has increased enormously... As long as less-skilled workers cannot shift to more productive tasks, increasing income inequality remains a threat.”

    What do you think?

  • In your view, what are the key reasons for the increasing income inequality in the United States?

  • How does income inequality affect the country?

  • If you think that income inequality should be reduced, how do you suggest doing so? Explain.

  • May 8, 2009

    Washington, Banks, and Struggling Homeowners

    This week on the JOURNAL, Bill Moyers spoke with U.S. Senator Dick Durbin (D-IL) about campaign finance reform and the prospects of Congress passing legislation to help struggling homeowners avoid foreclosure.

    Against intense opposition from banks and credit unions, Durbin has been working to pass a bill that would empower bankruptcy judges to reduce homeowners’ mortgage debt and help them to stay in their homes. Last week, 12 Democrats joined Senate Republicans to defeat the legislation.

    Durbin said that banks caused the current recession and are now working against government policy that would help solve the economic crisis:

    “It was clear to me that even though the mortgage foreclosure crisis is getting progressively worse in this country and is, I think, at the heart of our economic weakness, that the banks were unwilling to step in and really participate in finding a solution... Here we are in a recession brought on by these financial institutions [with] some very bad decisions that they’d made causing great pain and suffering for a lot of workers and businesses and homeowners across America. And yet when you sit down and talk about some fundamental reform of these financial institutions, so that people have a fighting chance when it comes to their credit cards, so that folks facing mortgage foreclosure have a final chance to maybe save their homes, basically the banks are gonna have the last word. It’s counterintuitive – the people who brought this crisis to us are the ones that are dictating policy.”

    Some argue that well-intentioned but misguided government policies are partly to blame for the mortgage crisis and that further federal intervention in the housing market could make things worse. Steven Malanga of CITY JOURNAL wrote:

    “Nearly a century of Washington’s efforts to promote homeownership has produced one calamity after another... As Washington grapples with the current mortgage crisis, advocates from both parties are already warning the feds not to relax their commitment to expanding homeownership – even if that means reviving the very kinds of programs and institutions that got us into trouble... Our praiseworthy initial efforts – to eliminate housing discrimination and provide all Americans an equal opportunity to buy a home – were eventually turned on their heads by advocates and politicians, who instead tried to ensure equality of outcomes... Political meddling in this vast marketplace has wreaked havoc time and again, and will continue to do so – if we let it.”

    What do you think?

  • What do you think of Durbin’s bill that would allow bankruptcy judges to reduce struggling homeowners’ mortgage debt?

  • Can the federal government institute policies to help today’s struggling homeowners without contributing to further economic problems in the future? Why or why not?

  • April 24, 2009

    What Would You Ask New Pecora Hearings to Investigate?

    (Photos by Robin Holland)

    This week, the U.S. Senate voted to support a new commission to investigate wrongdoing in the lead-up to the economic crisis. Bill Moyers asked economist Simon Johnson and legal scholar Michael Perino what they would want such a commission to investigate.

    Simon Johnson suggested:

    “I would want to understand whether the laws were broken in potentially predatory practices around the way the consumers were treated in the housing market and in the credit card markets recently… That question will reveal a lot of unethical behavior or a lot of behavior that we should be uncomfortable with and that will then lead, I think, to sensible changes in the laws. So, really digging into the micro details of who was taken advantage of, who was misled, how [they got] retired people into some of these esoteric financial products. And, of course, the selling of savings products also. We know that local governments, for example, were enticed into schemes that they really didn't understand. And, of course, it may turn out in the investigation that the banks didn't understand it either. But, going through [at] that level of detail and showing, you know, who made what kind of mistake, who was misled by whom, who misled themselves – that is going to give you the factual basis on [how] you could construct a lot of new, sensible laws.”

    Michael Perino recommended:

    “I'd add to it the role that the credit rating agencies played in this entire process. Particularly in the creation of these derivative instruments. It's an industry that I think is not well understood on Wall Street. I think there has been some reluctance to dig into exactly what's going on there, and that's something I think I'd want to take a hard look at.”

    What do you think? In examining the causes of the economic crisis, what would you ask a new Pecora Commission to investigate?

    POLL: On the Economy, Do Reformers Have Enough Momentum to Change the Status Quo?

    (Photo by Robin Holland)

    This week on the JOURNAL, Bill Moyers asked legal scholar Michael Perino and economist Simon Johnson for their thoughts on Congress’ proposed independent commission to explore what went wrong with the economy and how to prevent it from happening again. Johnson and Perino were skeptical that such a commission would change the status quo in the public interest.

    Perino said:

    “If you look back at the history of financial regulation, you see the same pattern over and over again. There are always huge biases toward the status quo. People want to keep the structure the way it is because it’s worked well for them. And it’s only when there’s some crisis occurring that the forces for reform are strong enough to overcome the status quo... It sometimes becomes very easy to obscure the broader causes of a financial crisis by doing a little finger pointing and saying ‘Ah ha, here’s the bad person. We found them and, you know, we can move on...’ Unless the political support is there, it's going to be very easy to wind things up without doing much.”

    Johnson said:

    “I think the banks have control of the state... They got the bailout, they got the money they needed to stay in business, they got a vast line of credit from the taxpayer... they got everything they wanted... If the economy turns around, even if we get a recovery that’s not completely convincing but we sort of feel like we're not falling, and we're not having the massive unemployment of the '20s and '30s, the pressure will come off the banks. They know this. This is why they think they won. They faced down the dangers and they've gone through this difficult phase, and they came through it stronger than ever.”

    What do you think? Take our poll and share your thoughts in the space below.

    April 6, 2009

    William K. Black on The Prompt Corrective Action Law

    The Prompt Corrective Action Law: Section 1831o

    William K. Black
    Associate Professor of Economics and Law
    University of Missouri – Kansas City
    Please note that the views and opinions expressed are not necessarily the views and opinions held by Bill Moyers or BILL MOYERS JOURNAL

    My comments in the Bill Moyers Journal interview about the “Prompt Corrective Action” (PCA) law (adopted in 1991) have sparked considerable comment in the blogsphere. Here is the portion of the interview transcript that discusses the PCA law.

    WILLIAM K. BLACK: Well, certainly in the financial sphere, I am. I think, first, the policies are substantively bad. Second, I think they completely lack integrity. Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they're refusing to obey the law.

    BILL MOYERS: In other words, they could have closed these banks without nationalizing them?

    WILLIAM K. BLACK: Well, you do a receivership. No one -- Ronald Reagan did receiverships. Nobody called it nationalization.

    BILL MOYERS: And that's a law?

    WILLIAM K. BLACK: That's the law.

    BILL MOYERS: So, Paulson could have done this? Geithner could do this?

    WILLIAM K. BLACK: Not could. Was mandated-

    BILL MOYERS: By the law.

    WILLIAM K. BLACK: By the law.

    I first published an article about the PCA law over a month ago entitled: “Why is Geithner Continuing Paulson’s Policy of Violating the Law?” (February 23, 2009).

    Continue reading "William K. Black on The Prompt Corrective Action Law" »

    April 3, 2009

    Sharing the Blame for the Economic Crisis?

    (Photo by Robin Holland)

    Discussing the roots of the economic crisis with Bill Moyers on this week’s JOURNAL, former regulator Bill Black said that much of the blame lies with lenders for issuing “liars’ loans,” in which borrowers’ claims about their financial situation were not verified. He said:

    “Liars’ loans mean that ‘We don’t check. You tell us what your income is, you tell us what your job is, you tell us what your assets are, and we agree to believe you. We won’t check on any of those things. And, by the way, you get a better deal if you inflate your income and your job history and your assets.’ We know they said that to borrowers. That’s what you do... They just gutted the verification process. We know that [it produces] enormous fraud under economic theory, criminology theory, and 2000 years of life experience.”

    In a special feature published in February, TIME magazine included “American Consumers” in its list of “25 People to Blame for the Financial Crisis:”

    “In the third quarter of 2008, Americans began saving more and spending less. Hurrah! That only took 40 years to happen. We've been borrowing, borrowing, borrowing — living off and believing in the wealth effect, first in stocks, which ended badly, then in real estate, which has ended even worse. Now we're out of bubbles. We have a lot less wealth — and a lot more effect. Household debt in the U.S. — the money we owe as individuals — zoomed to more than 130% of income in 2007, up from about 60% in 1982. We enjoyed living beyond our means — no wonder we wanted to believe it would never end.”

    What do you think?

  • Were lenders committing fraud? Why or why not?

  • How much responsibility, if any, do American borrowers and consumers bear for the present economic crisis? Explain.

  • Ask the JOURNAL's Banking Experts...

    This week, MOYERS ONLINE launches a special new web feature, MOYERS ON BANKS AND THE BAILOUT, that collects the diverse voices that have addressed the topic on the JOURNAL into one convenient interface.

    Do you have any questions about the economy that you've been dying to ask one of our experts? Please submit below, and in the coming weeks we'll consult the experts and post their answers on the MOYERS BLOG.

    Review our coverage of Banks and Bailouts

    March 27, 2009

    A Living Wage in an Ailing Economy?

    This week, the JOURNAL introduced James Thindwa, a community organizer in Chicago who has been involved in a lengthy campaign to force big-box stores like Wal-Mart to pay employees a living wage if they want to open locations in the city. Those efforts proved controversial in struggling neighborhoods that lack other employment opportunities.

    Thindwa said:

    “The opposition to the living wage was based on a couple of things... [some said] if we passed a living wage ordinance in Chicago that we're gonna drive businesses away, that Wal-Mart would not build a store in Chicago. [Some said] that when there is a job and you're out of work, you don't have the luxury to pick, you don't have the luxury to choose. And so we had to convince people that, no, it wasn’t just about a job, you know – the job has to be dignified, has to have meaning. Furthermore, corporations don't have a right to exploit people in a neighborhood just because those people are desperate, just because they're vulnerable, just because they're jobless. The task for us was to go out and talk to our allies and to convince them, to give them a good reason why this was not an obstructionist proposal, but that in fact this is in the long-term interest of the city and of its communities.”

    The JOURNAL story noted that Chicago’s leading newspapers, the SUN-TIMES and the TRIBUNE, ran numerous opinion pieces against the proposed living wage ordinance. In one column, published May 10th, 2004, the CHICAGO TRIBUNE’s Dennis Byrne wrote:

    “In a society in which ‘choice’ is regarded as the greatest civic right, it is hard to imagine why 700 people and their families should be deprived of jobs, which, in their wisdom, they choose to accept. In a stunning act of paternalism, they are being told that they shouldn’t work there “for their own good”... I assume that those who oppose Wal-Mart will have some other, perfect alternative lined up to take Wal-Mart’s place as an economic and job generator in those neighborhoods. Or even a not-so-good alternative. Or any alternative. You know they won’t, because they’re too busy hanging on to their jobs as ‘activists,’ by creating a monster and then turning a mob on it.”

    What do you think?

  • Are activists’ efforts to mandate a living wage worth the risk of repelling businesses that might otherwise locate in struggling areas? Why or why not?

  • James Thindwa states that “the job has to be dignified, has to have meaning.” To what extent, if any, do you think that the current economic crisis affects his expectation? Explain.

  • Do You Trust the Federal Reserve?

    (Photo by Robin Holland)

    This week on the JOURNAL, Bill Moyers spoke with journalist William Greider about the state of the economy and his thoughts on the Obama administration's plans for recovery... Greider said:

    "I think it’s pretty well understood in Washington that the administration and the treasury secretary would like to give this to the Federal Reserve. The Federal Reserve, as many people know, is a sort of unique cloistered institution of government that is insulated from political accountability and usually quite secretive. My accusation is that it tipped its favor hard in favor of capitalism and against labor over the last 25 to 30 years, and become a kind of cheerleader under Alan Greenspan for all the excesses and so-called modernization that are now in ruin. Just as a matter of logic, why would we want to give more power to a governing institution that was already supposed to defend the ‘safety and soundness of the system?’... The Federal Reserve, because it is so close to the major banks, did what it could to help those financial institutions and, bluntly, betrayed its public obligation."

    What do you think? Do you trust the Federal Reserve to manage the economy in the public interest? Why or why not?

    March 20, 2009

    Facing Historical Vertigo?

    (Photo by Robin Holland)

    This week on the JOURNAL, Bill Moyers spoke with author Mike Davis for a socialist perspective on the world’s daunting economic situation. Davis referenced a column he wrote for likening today’s perspective on the crisis to when Europeans first saw the Grand Canyon. The column read:

    “[One] expedition included a well-known German artist, but his sketch of the Canyon was wildly distorted, almost hysterical. [None of the early Europeans] could make sense of what they saw; they were simply overwhelmed by unexpected revelation. In a fundamental sense, they were blind because they lacked the concepts necessary to organize a coherent vision of an utterly new landscape... It took years of brilliant fieldwork to construct a conceptual framework for taking in the canyon... [before] it was finally possible for raw perception to be transformed into consistent vision... Like the Grand Canyon's first explorers, we are looking into an unprecedented abyss of economic and social turmoil that confounds our previous perceptions of historical risk. Our vertigo is intensified by our ignorance of the depth of the crisis or any sense of how far we might ultimately fall.”

    What do you think?

  • Do you agree with Davis that the current crisis represents “an unprecedented abyss of economic and social turmoil” that is beyond the present level of human understanding? Why or why not?

  • Davis suggests that the economic crisis defies the scope of our current understanding. Are there other issues with vast significance that most people simply can not comprehend?

  • February 27, 2009

    To Nationalize or Not To Nationalize...

    In this week’s edition of the JOURNAL, Bill Moyers spoke with economist Robert Johnson about the precarious state of many banks in the U.S. and across the world. Johnson suggested that President Obama should take tough action on failing banks:

    "People talk about nationalization – I just call it restructuring. Restructuring is part of capitalism. That’s how the airlines get restructured when they go through bankruptcy, or how you deal with the auto industry, how you deal with venture capital projects. Do the same thing with the banks... I think the notion of ‘nationalization’ has been a little bit of a PR spin. Restructuring is what you do in capitalist economies to maintain function and continuity. Nationalization evokes the specter of the state seizing the means of production, like Che Guevera is about to take over or something... The government just becomes the stockholder until such time that they sell the stock back to the market and get paid back a little bit for all the lost support that they’re creating for these banks."

    William M. Isaac was head of the Federal Deposit Insurance Corporation during the banking crisis of the 1980s, when it nationalized Continental Illinois Bank, which was then the nation’s seventh-largest. In a column for the WALL STREET JOURNAL, Isaac argued against nationalization:

    "Any bank we nationalize will be forced, both by regulators and the marketplace, to shrink dramatically... What’s more, we won’t be able to stop at nationalizing one or two banks. If we start down that path, the short sellers and other speculators that the Securities and Exchange Commission still refuses to re-regulate will target for destruction one after another of our largest banks... For nationalization to work there needs to be a reasonable exit strategy... Today, who has the wherewithal, legal authority, and desire to purchase our largest banks? No one comes to mind, particularly if we rule out foreign powers, which I suspect would not pass muster due to national security concerns about ceding that much power over our economy to foreign powers... Who will run these companies when we dismiss the existing senior managers and board members? We had significant difficulties attracting quality people to Continental even without today’s limits on compensation."

    What do you think? Should the Obama administration nationalize America’s failing banks? Why or why not?

    February 13, 2009

    POLL: Do You Support President Obama's Stimulus Plan?

    Last week on THE JOURNAL, Bill Moyers mentioned some recent polling that suggests public support for President Obama’s economic stimulus plan has been eroding:

    “Support for the economic recovery plan working its way through Congress has fallen again this week. For the first time, a plurality of voters nationwide oppose the $800-billion-plus plan. The latest Rasmussen Reports national telephone survey found that 37% favor the legislation, 43% are opposed, and 20% are not sure. Two weeks ago, 45% supported the plan. Last week, 42% supported it. Opposition has grown from 34% two weeks ago to 39% last week and 43% today... Related survey data shows that half the nation’s voters say the plan that finally emerges from Congress may end up doing more harm than good.

    What do you think? Take our poll and respond in the space below.

    December 19, 2008

    Should Governments Raise Taxes During a Recession?

    In this week’s edition of the JOURNAL, Bill Moyers talked with New York Governor David Paterson (D) about his efforts to balance his state’s budget amidst the economic crisis. The governor’s plan, which requires legislative approval, proposes dozens of new fees and tax increases on such goods as digital entertainment and sugary soft drinks, while cutting spending on education and social services.

    Paterson said:

    “Obviously there aren't many places for governors and legislators to go. You're gonna have to cut healthcare and education because they comprise huge amounts of state budgets. There is a lot of pain in the downturn of this economy, and I think 2009 will be the year that people feel the pain... I'm thinking that the sooner we respond to this crisis, the stronger and faster that we'll emerge from it and that perhaps we can learn a lesson about budget priorities in that we as governments have made the same mistake that consumers have made running up $950 billion in credit card debt... We were seduced by this societal doctrine that you can just keep borrowing and pushing problems off to the future. The future has now stared us right in the face and we're in economic peril.”

    Some voices have come out against Paterson’s taxing and spending proposals, arguing that raising the costs of living and business are counterproductive in times of economic hardship. Elizabeth Benjamin of the NEW YORK DAILY NEWS quoted comments from New York Conservative Party chairman Mike Long:

    "Long noted that Paterson's budget actually increases spending slightly, which the chairman finds 'unacceptable' and proof that the governor, while he talks tough about taxes, is in fact 'conflicted' by his 'big nanny-state government beliefs.'

    'Spending must be cut, every bit of waste must be eliminated, every program that can be consolidated should be, every available option to reduce the tax burden must be made before any tax is raised,' Long said... 'The new taxes you propose will only drive more businesses and people out of New York. Every leading economist knows you cannot tax your way out of a recession and with your new tax proposals, you are proving that "people start thinking of ways to spend money."'"

    What do you think?

  • Should government raise taxes during a recession? Why or why not?
  • Are you in a state with severe budget woes? How are your elected officials proposing to cope with the economic downturn?

  • December 12, 2008

    An Act of Civil Disobedience amidst the Economic Crisis

    (Photo by Robin Holland)

    This week's JOURNAL reported on the laid-off Chicago workers who successfully occupied their shuttered former workplace, Republic Windows & Doors, for several days to procure money and benefits.

    Bank of America had eliminated Republic's credit line because the company was unable to operate profitably in the current economic climate. In the face of political and public pressure following broad media coverage of the workers' sit-in, Bank of America restored Republic's credit to cover the severance and benefits to which the workers are legally entitled.

    Bill Moyers talked with legal and economic scholar Emma Coleman Jordan about the federal government's bailout efforts and asked her about the workers' actions in Chicago. Jordan said:

    "It is an opportunity that these workers took to stand up directly, and it's interesting because they targeted not just their employer, Republic Windows & Doors, but they targeted Bank of America. If you saw those signs, they explicitly understood the connection between finance and the closing of the plant. Bank of America -- $25 billion [recipient from the federal government] Bank of America -- cuts off the line of credit to Republic Windows & Doors... And the workers simply said, 'This is not fair. We're mad as hell and we're not going to take it anymore.' And they took direct action. I think that's a healthy thing for our democracy."

    Some critics have suggested that Bank of America acted irresponsibly to extend credit to a failing business that will not be able to repay the loan. Andy Busch of BMO Capital Markets wrote:

    "This is the path the United States is heading towards as the recession takes its toll and government reaches further and further into the private sector to stabilize the economy. Initially, the moves are welcomed as workers are looked after, jobs are created, and big business vilified. However, the government forcing banks to make loans to companies that can't make the payments perpetuates the weak credit problem and keeps the cycle going. This cycle deploys capital to non-productive uses and keeps it from flowing to solid companies that can create new jobs."

    What do you think?

  • Was the Republic Windows & Doors workers' civil disobedience an appropriate reaction to their situation? Why or why not?
  • Did Bank of America make the right decision to restore the credit line? Is it sustainable to continue doing so with other failing companies in the future?
  • Are there limitations of using civil disobedience to work toward a better society?

  • November 21, 2008

    A Bailout for Homeowners?

    (Photo by Robin Holland)

    This week on the JOURNAL, guest host Deborah Amos spoke with NEW YORK TIMES business columnist Joe Nocera about the recent federal bailouts of large institutions and what might happen next.

    Nocera said that the federal government should attempt to bail out homeowners:

    “This is not an issue of compassion or liberalism or anything like that. This has to do with solving the financial crisis. You cannot solve the financial crisis if you don’t solve the problem at the root, which is on Main Street in people’s homes where they either have subprime mortgages that are going to reset in ways that will make them unable to pay their mortgages, or they’re already facing foreclosure... the money that you would spend now to modify mortgages and help keep people in their homes would be more than justified because if you don’t do it, the financial ramifications are going to be huge.”

    Some have contended that a homeowner bailout is more difficult and complex than it sounds. Nocera’s fellow NEW YORK TIMES columnist David Leonhardt urged caution:

    “Coming up with a large-scale homeowner bailout without also helping millions of people who don’t need help is almost impossible... As soon as the government announces that it will help everyone at risk of foreclosure, a lot of people are suddenly going to decide they’re at risk for foreclosure... Multiply 19 million mortgages by a couple of hundred thousand dollars, and the government could be left with $4 trillion in obligations.”

    What do you think?

  • Should the federal government attempt a bailout of homeowners not keeping up with their mortgages? Why or why not?

  • Would such a bailout create a “moral hazard” that condones and/or encourages irresponsible financial behavior? Explain.

  • October 24, 2008

    'But Who Shall Guard The Guardians?'

    (Photo by Robin Holland)

    This week on the JOURNAL, Bill Moyers spoke with economist James K. Galbraith about the causes of the economic crisis and how the U.S. might best move forward.

    Galbraith advocated expanding government regulation of the economy:

    "Here in the United States the capacity to handle the crisis exists. What we need is a government that's willing to use that capacity, that believes in it... Regulation is not a burden on business. When it's done properly, it's a framework which favors the more efficient, the more progressive, the more satisfactory elements of business that are prepared to work within the guidelines set by a larger public purpose."

    Nearly two thousand years ago, the Roman satirical poet Juvenal asked “Sed quis custodiet ipsos custodes,” which translates to “But who shall guard the guardians?” Juvenal’s immediate topic was Roman licentiousness, but his famous question has come to stand for a more enduring problem: that those entrusted to enforce moral standards are subject to the same human failings as those they regulate.

    Juvenal’s point is echoed by libertarians and others skeptical about the ability of government to enact sensible and fair policies. In a CHRISTIAN SCIENCE MONITOR column, economist Steven Horwitz wrote:

    “In a free market, firms profit by satisfying their customers, investing wisely, and making prudent loans... To call the housing and credit crisis a failure of the free market or the product of unregulated greed is to overlook the myriad government regulations, policies, and political pronouncements that have both reduced the freedom of this market and led self-interested actors to produce disastrous consequences, often unintentionally... Regulations designed with the best of intentions are likely to lead to more crises if they distort incentives and thereby cause individual "greed" to undermine economic growth and harm millions. History is full of examples of politicians adopting short-run solutions without seeing the harmful long-run consequences.”

    What do you think?

  • Should lawmakers pursue a course of heightened regulation in response to the economic crisis? Why or why not?
  • Galbraith claimed that both Democrats and Republicans paved the way to today's troubled economy. Do you trust politicians from these two parties to enact good-faith regulation in the public interest?

  • October 10, 2008

    Market Fundamentalism and the Madness of Crowds

    (Photo by Robin Holland)

    This week on the JOURNAL, Bill Moyers spoke with prominent investor and political activist George Soros about the economic crisis and its underlying causes.

    Soros attributed much of the current downturn to an erroneous faith in the market to govern itself:

    "There has been some kind of an ideological excess: namely, market fundamentalism for the last 25 or so years… It's that markets will correct themselves, that you should leave it to the markets, and there is no need for government intervention in financial affairs. Letting markets run rampant, and that doesn't work…

    Sometimes we get carried away. You know, in the Middle Ages people were religious. And so they had tremendous discussions about how many angels can dance on the eye of a needle. Now, if you believe that angels can dance then that's a legitimate question. And this is exactly what has happened here. You thought that you could slice and dice and engage in this kind of financial engineering. And it became very, very sophisticated and got carried away."

    In his famed MEMOIRS OF EXTRAORDINARY POPULAR DELUSIONS AND THE MADNESS OF CROWDS, 19th century historian Charles Mackay chronicled numerous economic disasters caused by irrational human behavior, including the tulip mania in 17th century Holland. Mackay wrote:

    "In reading the history of nations, we find that, like individuals, they have their whims and their peculiarities; their seasons of excitement and recklessness, when they care not what they do. We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first. … Money, again, has often been a cause of the delusion of multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper… Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."

    What do you think?

  • Is George Soros right that the present crisis was caused by an irrational faith in markets? Why or why not?
  • Have you seen evidence of a parallel irrational faith in government regulation, both in the economy and elsewhere? Explain.
  • Is there something inherent in the human condition that causes economic boom and bust cycles? Why or why not?

  • October 3, 2008

    Bailout Blues?

    (Photo by Robin Holland)

    This week on the JOURNAL, scholar Emma Coleman Jordan talked about the economic crisis and the controversial government bailout legislation. When Bill Moyers asked who stands to lose in the economic rescue package, she replied:

    “The middle class is getting the short end of the stick, and those who are in that bottom quintile, the bottom 20 percent, who are not getting basic needs met and are struggling to get by everyday.”

    As the McClatchy Washington Bureau reports, many citizens and elected officials have been ambivalent about the bailout, troubled by some of the legislation's provisions but reluctant to stand in its way.

    "Rep. Jim McGovern, D-Mass., summed up the feelings of many of his colleagues when he described the legislation as 'far from perfect' but acknowledged: 'The way I see it we don't have much choice.' ... Lobbyists from banks and giant corporations joined ordinary citizens throughout the week in urging House members to support the bill. Public opinion earlier ran strongly against the measure — widely perceived as a bailout for Wall Street — but sentiment shifted after the first House vote, when a stock-market plunge hammered millions of stock-backed 401(k) retirement plans."

    What do you think?

  • Do you support the bailout package that President Bush signed into law this afternoon? Why or why not?
  • Do you trust lawmakers to practice effective stewardship over the economy?
  • What actions do you suggest Americans take to try to prevent similar crises in the future?

  • September 19, 2008

    Are The Financial Bailouts A Good Idea?

    This week on the JOURNAL, Bill Moyers spoke with several guests about what’s been on everyone’s mind: the financial meltdown and the historic government bailouts.

    NEW YORK TIMES financial columnists Floyd Norris and Gretchen Morgenson discussed what bailouts entail. Morgenson said:

    “The ugly thing about this is privatizing gains and socializing losses. So when things are going well, the managements make out, the shareholders make out, the counterparties are fine. All the private sector people do well. But when something goes wrong, when decisions are made that turn out to be bad decisions, the U.S. taxpayer has to take on the problem. And there’s something very wrong about that.”

    Economic and political critic Kevin Phillips argued that both parties bear responsibility for the economic crisis and are unlikely to shake up the status quo.

    “It’s been a bipartisan phenomenon. You can go back to the 1980s and say Reagan and George Bush, Sr. got a bubble started. Clinton got in and got an even bigger bubble going. And then George W. Bush with the biggest bubble of all. But it’s not that the Clintonites didn’t play. They did... The Democrats think it's going to be another 1933, they get in there [and] they can do all the New Deal stuff. My feeling is that they're coming in halfway and they're going to have to make hard decisions that are going to eat the Democratic coalition like a bologna sandwich.”

    Some commentators on the left see a silver lining in getting the government involved in various companies. Welcoming what he terms “massive socialism,” Matthew Yglesias of THINK PROGRESS wrote:

    “Isn’t there an enormous progressive opportunity here? ... If the government directly controls major financial institutions, that would give the new administration extraordinary leverage over the national economy... I think it creates a real opportunity for ‘socially conscious insurance underwriting’ or whatever you care to call it.”

    But INVESTOR’S BUSINESS DAILY contends that government social policy has been a major contributor to the economic mess:

    “It was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans... Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.”

    What do you think?

  • Are the financial bailouts a good idea? Why or why not?
  • Do you want the government to enact social policy through the companies it has nationalized?
  • How do you think the economic crisis should be handled? Are your ideas politically possible?

  • September 17, 2008

    What Questions Would You Ask U.S. Financial Leaders?

    With ominous news of financial turmoil dominating the headlines, this week’s edition of BILL MOYERS JOURNAL will focus on the economy. But first, we want to know what questions you would ask of economic experts, journalists and U.S. financial leaders like Chairman Ben Bernanke of the Federal Reserve or Secretary of the Treasury Henry M. Paulson.

    Please submit your questions below.

    August 8, 2008

    Bill Moyers Asks: What Should The Next Administration Do About America's Troubles?

    This week on the JOURNAL, Bill Moyers talked with economist Dean Baker and columnist Bob Herbert about the economy and the political conditions that have contributed to its troubles.

    Bob Herbert said:

    “The class war is over, and we lost... Over the past 30 years or so, Americans’ wages have remained relatively flat. But women went into the workplace, wives and mothers started working. People started putting things on their credit cards. There was a stock market bubble there for a while. We had a housing bubble. People refinanced and stuff. Now, they’re coming up against a wall. They’re not finding a way now to get some extra money to power the consumer economy.”

    Dean Baker suggested that public officials deliberately failed to protect ordinary Americans:

    “All the people who should have been looking out the last six, seven, eight years are all going ‘oh, well, who could have known? Who could have known?’ And they’ll put Alan Greenspan here on a pedestal, because he’s [saying that] he had no idea this was going on. You had to try not to know this was going on. Certainly, someone like Alan Greenspan, our reserve board chair, had all the data I have times a thousand. He absolutely knew what was going on. And he was doing his best to look the other way because you had a lot of big interests who were making a lot of money.”

    Faced with these dire diagnoses, Bill Moyers asked:

    “No matter who wins this election, the next administration will inherit the mess: $10 trillion in debt, two of these wars, stagnating paychecks, growing inequality. What’s the first thing each of you would like to see the next administration do, whether it’s McCain or Obama?”

    What do you think? And, do you expect the next administration to take up any of your suggestions?

    July 18, 2008

    Facing Economic Troubles

    (Photo by Robin Holland)

    This week, the JOURNAL presented two different perspectives on our troubled economy. The first came from frustrated citizens of Cleveland grappling with their community’s extraordinarily high rates of foreclosure. Cuyahoga County treasurer Jim Rokakis said:

    “Back in the old days when there was no sheriff in town, people would rob the banks. Well, here we are in the modern day era, and there’s no sheriff in town. The banks were robbing the people... I learned a hard lesson: I learned that the Fed really is there to protect banks, and not to protect the consumers.”

    For another viewpoint, Bill Moyers spoke with journalist William Greider, who wrote in THE NATION:

    “We are witnessing a momentous event--the great deflation of Wall Street--and it is far from over. The crash of IndyMac is just the beginning. More banks will fail, so will many more debtors. The crisis has the potential to transform American politics because, first it destroys a generation of ideological bromides about free markets, and, second, because it makes visible the ugly power realities of our deformed democracy. Democrats and Republicans are bipartisan in this crisis because they have colluded all along over thirty years in creating the unregulated financial system and mammoth mega-banks that produced the phony valuations and deceitful assurances. The federal government protects the most powerful interests from the consequences of their plundering. It prescribes 'market justice' for everyone else.”

    What do you think?

  • How have the recent economic troubles played out in your community?

  • What do you think should be done about our economic troubles? Who should do it? What do you expect to happen?

  • June 27, 2008

    Policies To Save Our Planet?

    This week on the JOURNAL, Bill Moyers spoke with Sen. Barbara Boxer (D-CA), chair of the Senate Environment and Public Works Committee, about her efforts to advance “cap and trade” legislation as a response to climate change.

    “We have to have a bill that gets the job done, that reduces greenhouse gas emissions so that temperatures don’t go up, you know, much above a couple of degrees over time, because if they do we’re in a lot of trouble here... There’s never going to be a good time. This is hard, we have to deal with it, and so we have to act. You cannot hide under the covers and say ‘wake me up when gas prices go under a dollar a gallon and then I’ll bring up global warming legislation’... I believe this can be structured in such a way that it actually brings around an economic renaissance.”

    An article from the WASHINGTON POST highlights some of the challenges the “cap and trade” model has faced since its implementation in Europe and could encounter in the United States.

    “What the snappy name ‘cap and trade’ means is that the market will put a price on something that’s always been free: the right of a factory to emit carbon gases. That could affect the cost of everything from windowpanes to airline tickets to electricity... In some ways, Europe’s program has been a success... in other ways, the approach has been a bureaucratic morass with a host of unexpected and costly side effects and a much smaller effect on carbon emissions than planned...

    One key issue is how to deal with imports from countries that don’t price carbon. A U.S. system that raised costs for U.S. firms would make imported goods, especially from India and China, even more competitive, adding to the trade deficit and possibly driving U.S. companies out of business”

    What do you think?

  • Should the government act on climate change? If so, should it pursue a "cap and trade" policy, or would you suggest alternative legislation?

  • June 13, 2008

    The American Dream In Reverse?

    (Photos by Robin Holland)

    Are we living in a second gilded age? Yes, according to historian Steven Fraser, one of Bill Moyers’ guests on the JOURNAL this week.

    “Basically, we left the financial marketplace largely unregulated – a tendency which had begun under Reagan and continued at an accelerated pace all through the years since Reagan, including under the Clinton administration... When push comes to shove, businessmen and their financial enablers may talk the talk about the free market. But when times get tough, they turn to the government to bail them out... That is this close, almost incestuous relationship between business and government.”

    Bill Moyers also spoke with columnist Holly Sklar about the difficulties many workers face in trying to earn a living wage. She said:

    “We’ve been living the American dream in reverse... Adjusting for inflation, average wages are lower than they were in the 1970s. Our minimum wage, adjusting for inflation, is lower than it was in the 1950s. One of the things going on is that income and wealth inequality have gone back to the 1920s. We are back at levels that we saw right before the Great Depression.”

    On the ground in Los Angeles, the JOURNAL introduced Jaron Quetel, a young union member struggling to make ends meet. He said:

    “Working the best job I’ve ever had in my whole life, I’m still a breath away from drowning. I’m $20 away from being on the street. I am one car payment away from being re-poed. I’m barely surviving. I’m leading a substandard lifestyle because I make substandard wages... If I wasn’t trying, if I was a screw-up, if I was taking advantage of things, I couldn’t complain. But what more can I do at this point?”

  • Are you feeling pinched by today’s economy? Are people in your community?
  • What economic policies would you like to see put into place? Do you expect politicians to enact any of them?

    [Please note we have provided a list of sites related to clean elections and you can find sites and research related to economic disparity and the work of Holly Sklar.]

  • February 15, 2008

    Where Does (And Should) The Money Go?

    In the JOURNAL this week, WHERE DOES THE MONEY GO? authors and budget scrutinizers Scott Bittle and Jean Johnson contend that Washington’s fiscal irresponsibility is propelling America toward troubled times.

    Scott Bittle said:

    “Eventually, if nothing is done, by 2040 every dollar the federal government has will be taken in by Social Security, Medicare, and interest on the money we’ve already borrowed... Right now, one of the few areas of bipartisanship in Washington is the willingness not to deal with the problem... The war is certainly making our financial problems worse. But it’s not the sole cause and it’s not the sole answer."

    Jean Johnson said:

    “People don’t realize that the country has been in the red 31 out of the last 35 years, in good times and bad... There is no way to solve this problem without either raising taxes or cutting programs, or doing some of both. Right now that is a political death sentence, and we have to change that... We’re all gonna have to give a little and we’re all gonna have to live with some things that are not our first choice, but not doing anything is so much worse.”

    What do you think?

  • How, if at all, do you suggest the tax code be altered to ease the government’s fiscal crunch?
  • What, if any, programs should be reduced or cut to balance the budget?
  • What other suggestions do you have to bring the federal budget into the black?

  • January 25, 2008

    Assessing The "Economic Growth Package"

    (Photo by Robin Holland)

    Ordinary Americans and the media alike have been astir this week with discussions of the looming recession and the “economic growth package” Washington quickly assembled in response. In her conversation with Bill Moyers on the JOURNAL, sociologist Katherine Newman shared her thoughts about their plan:

    “It's a bad news situation out there for millions of Americans who are really going to worry about their futures and their children's futures... I think they'll be pleased to hear that Congress and the President have found some way to cooperate with one another. But a lot of people will be left out and left in the cold.

    I'm more encouraged than I thought I would be, because it provides rebates for people lower down the income spectrum that I thought it would. But I am very concerned about the long-term unemployed, which is rising, not only in general, but as a proportion of the unemployed. And that's one of the disappointments of the stimulus package... I think if we built more infrastructure, we would see a greater long term benefit from the money we're investing, because we will improve our roads, our schools. And you know, that's exactly what Franklin Roosevelt thought. And that’s why he put millions of Americans to work.”

    What do YOU think?

  • Do you support the “economic growth package” announced this week? Why?

  • Are you “pleased to hear” that the quick formulation of the “economic growth package” is the result of bipartisan cooperation?

  • Do you think it is a good idea for government to expand public employment in areas like infrastructure maintenance and education as a means to mend our economy?

  • January 18, 2008

    Leveling The Playing Field?

    (Photo by Robin Holland)

    Conversing with Bill Moyers on the JOURNAL this week, investigative reporter David Cay Johnston said:

    "Get rich by working hard, working smarter, coming up with a better mouse-trap. Don’t get rich by getting the government to pass a law that sticks the government’s hand into my pocket, takes money out of it, and gives it to you. That’s not right. That’s not a fair playing field. Adam Smith warned again and again that it is the nature and tendency of business people to want to put their thumb on the scale and, even better, to get the government to put the thumb on the scale for their benefit... You need entrepreneurs to have a good society. I don’t have any problem with entrepreneurs. But we need to have a system that also fairly distributes... When we have people who make billon-dollar-a-year incomes and pay 15 percent taxes and janitors who pay the same tax rate and school teachers who pay a 25 percent tax rate, something’s amiss."

    What do you think?

  • Is America’s present tax system unfair? If so, what do you suggest?

  • Does government have the responsibility to pursue redistribution of wealth? If so, what are reasonable expectations for such a policy?

  • December 5, 2007

    Trade Update: The Peru Deal

    For those of you on the free trade beat, Senate Democrats and Republicans yesterday overwhelmingly approved a trade deal with Peru, handing President Bush "an unusual victory," says THE NEW YORK TIMES, yet it remains to be seen whether the deal will serve as a catalyst for similar agreements in Latin America and Asia.

    The Peru deal passed the House in November, though by a slimmer margin, after both parties reached a late compromise. As Speaker Pelosi explains after the vote:

    Today, the House built upon President John F. Kennedy’s legacy of free trade by passing an agreement that promotes both free and fair trade. The Peru Free Trade Agreement represents a remarkable breakthrough because Democrats were able to secure enforceable, basic labor rights and environmental standards in the core text of a free trade agreement.

    President Bush too praised the recent Senate vote, yet continues to urge lawmakers to hasten the passage of pending agreements:

    Today's action by the Senate also marks the approval of the first free trade agreement that fulfills the May 10 bipartisan trade agreement with Congress by incorporating enforceable labor and environmental standards. I look forward to signing this legislation into law and urge Congress to promptly consider and approve our other pending free trade agreements, starting with Colombia, which would be important to the stability of the region, and including Panama and South Korea.

    What do you think?

  • Will passage of the Peru agreement affect pending trade deals with Panama, South Korea and Colombia?

  • November 2, 2007

    The Missing Class

    This week, professor Katherine Newman discussed the “missing class” – millions of Americans who are technically above the poverty line but still far from a middle-class standard of living.

    “It’s a fragile existence because they don’t really have the security that comes with owning a home, for example, or having a savings account, or any of the other buffers the rest of us have – and they don’t qualify for federal benefits for the most part… They can’t get Medicaid because they’re too wealthy for that. They don’t get food stamps. They don’t get subsidized housing, for the most part. So we don’t really think about them very much. We don’t even track how many of them we have.”

    Most of the estimated 50 million members of this class remain missing, at least in the national discourse. In the interview, Newman introduced us to just two families from the nine that it took her seven years to write about, and all from the New York area.

    What do you think?

  • Do you have stories of “missing” individuals and families? How is this class represented in your community?
  • Given professor Newman’s perspectives and analyses of a “missing class”, how can we best serve this demographic? What should the government’s role be?

  • Photo: Robin Holland

    October 12, 2007

    Moral Hazards and the Fed

    In their conversation this week with Bill Moyers, economic journalist Robert Kuttner and former SEC chairman William H. Donaldson questioned the wisdom of Federal Reserve heads Alan Greenspan and Ben Bernanke’s interest rate cuts in times of economic crisis - most recently the half-point cut on September 18 in response to the sub-prime mortgage collapse.

    Robert Kuttner suggests that the resulting flow of cheap money is a quick-fix that obscures the root causes of economic woes and, perhaps, makes them worse:

    The Fed cheapens money and bails the economy out and then invites the next round of speculative excess…The risk is that every time we repeat this cycle, we get bigger and riskier bubbles. And with the dollar being in the tank, it’s not a costless kind of bailout… We’re going to see inflationary pressures as a result of the cheap dollar.

    “The sub-prime crisis was the result of the Fed’s failure to enforce lending standards…On the one hand, [Alan Greenspan] did not use a lot of the regulatory power that he had. On the other hand, every time there was a credit crunch he would race to the rescue…It seems to me if you’re going to bail out problems after the fact, you have an obligation to prevent some of them before they start.”

    William H. Donaldson argues that rate cuts can lead to a “moral hazard,” in which the presumption of a Federal Reserve bailout might actually encourage some to make irresponsible and/or ill-considered investment decisions:

    The Federal Reserve, the central bank, has an ability to reverse a downturn, but at great cost… Insofar as they do, we run into a moral hazard, i.e. we bail out the people who made bad or devious – whatever you want to call them – investment decisions. So you sort of are saying “Go ahead and do whatever you want, and you can count on the good old Fed to bail you out."

    Between widespread controversy over Chairman Bernanke’s recent interest rate cut, Alan Greenspan’s recent best-selling book, and criticism of the Federal Reserve on the campaign trail (including some suggestions that it be eliminated altogether), the Fed has become a hot topic.

    What do you think?

  • Should the Federal Reserve act more aggressively to regulate areas of the market suspected of improprieties?
  • Should the Fed continue to respond to economic crises with interest rate cuts to encourage liquidity?
  • Will the Fed’s actions ultimately be a boon for the U.S. economy?

    Photos: Robin Holland

  • September 27, 2007

    A Crisis of Capitalism?

    In his interview with John Bogle, Bill Moyers cites this article from THE NEW YORK TIMES. which examines more than 1,200 nursing homes purchased by large private investment groups.

    The piece, "At Many Homes, More Profit and Less Nursing" reports that:

    "The TIMES analysis shows that managers at many other nursing homes acquired by large private investors have cut expenses and staff, sometimes below minimum legal requirements..."

    "...In recent years, large private investment groups have agreed to buy 6 of the nation's 10 largest nursing home chains, containing over 141,000 beds, or 9 percent of the nation's total."

    The article further details residents from one home who died from what family members call negligent care, while investors profited millions.

    Bogle calls this a "national disgrace," contending that:

    "There are some things that must be entrusted to government and some things that must be entrusted to private enterprise. "

    Do you agree?

    How do we determine what falls into the responsibility of private investment and what is better handled by government?

    Photo: Robin Holland

    August 3, 2007

    A New American Dream?

    It was James Truslow Adams who first coined the term "The American Dream" in his book THE EPIC OF AMERICA written in 1931. He writes that the American dream is:

    "...that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.

    It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position."

    But Barbara Ehrenreich, who has lived, worked and fought along side low-wage workers has witnessed the growing disparity of wages between the rich and poor. The hopes and dreams of many of the workers she's been hearing from seem to differ from the definition above. Says Ehrenreich:

    "There was one woman who said something to me that was so poignant. Speaking of her hopes for the future, she said, 'My big wish would be to have a job which if I missed work one day, like for a child home sick or something, I would still be able to buy groceries for the next day.' And I thought, yeah, that's quite a hope."

    How would you define the American Dream?

  • Has it changed for you over time?
  • Do you think your children or even your grandchildren will define it the same way?

    Photo: Robin Holland

  • July 3, 2007

    Story Updates: Libby, Eagles, Trade and more

    Libby Sentence Commuted: Reaction to President Bush's commutation of Scooter Libby's sentence was rapid. House Judiciary Committee Chairman John Conyers, Jr. announced that he will be holding a full committee hearing next week titled, "The Use and Misuse of Presidential Clemency Power for Executive Branch Officials." After President Clinton pardoned 140 people on his last day in office, Congressional leadership held similar hearings entitled, "Proposals to amend the president’s power to grant reprieves and pardons." Read an excerpt from testimony here.

    Read more about the issues surrounding the case and continue the conversation.

    Watch Bill Moyers' recent essay entitled, "Begging his Pardon"

    "We have yet another remarkable revelation of the mindset of Washington's ruling clique of neoconservative elites—the people who took us to war from the safety of their Beltway bunkers. Even as Iraq grows bloodier by the day, their passion of the week is to keep one of their own from going to jail."

    Watch Bill Moyers interview with Ambassador Joseph Wilson from NOW with Bill Moyers, February 28, 2003. It was the release of Wilson's wife, Valerie Plame's identity as a CIA agent which led to the Libby trial.

    "Somehow it's hard for me to imagine that a democratic system will emerge out of the ashes of Iraq in the near term. And when and if it does, it's hard for me to believe that it will be more pro-American and more pro-Israeli than what you've got now," says Joseph Wilson in his interview.

    More about Plamegate and Judith Miller from BUYING THE WAR.

    Continue reading "Story Updates: Libby, Eagles, Trade and more" »

    June 15, 2007

    When One Becomes Two...

    Both Andy Stern and Grace Lee Boggs agree that when active, informed citizens band together with common cause, they can make a world of change:

    I always listen to Margaret Mead who says never doubt that a small group of committed citizens can change the world. In fact, it's the only thing that ever has...

    ...We have seen incredible acts of courage and heroism by very small groups of people like in the civil rights movement...but we don't want small answers anymore. We don't want small changes.

    I believe that we are at the point now, in the United States, where a movement is beginning to emerge... the present moment, is demanding that instead of just complaining about these things, instead of just protesting about these things, we begin to look for, and hope for, another way of living. I see the signs in the various small groups that are emerging all over the place to try and regain our humanity in very practical ways.

    In your community, do you see signs of a grassroots revolution emerging?

    We invite you to tell your stories about groups that you've joined or witnessed in your local communities that speak to this notion of informed citizens effecting change, one small seed at a time.

    Photos: Robin Holland

    June 6, 2007

    Preview: High-Flying Executives

    Watch the video

    This Week on Bill Moyers Journal:

    Beginning to trade on the NYSE last week, Northwest airlines dodged the bankruptcy bullet.

    But while a $1.4 billion a year cut in labor expenses has ensured lower costs for Northwest, why are airline executives still flying high on salaries, stock options and benefits while workers and retirees see cuts in pay and compensation?

    Check Your Local Listings here and we'll see you on the blog after the show.

    May 17, 2007

    Poll: Free Trade

    Answer our poll question, then debate the topic below.

    A Companion Blog to Bill Moyers Journal

    Your Comments


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