So that's where the money went.

So, in secret, the Fed subsidizes big banks to the tune of over $250 million dollars (So That's Where the Money Went, Sunday Business, December 5, 2010:1,5). What did Main Street get? Nothing!

A much better way to stem the panic induced by failing mortgages would have been to do one of two things:
1. Force the lenders, as a condition of the subsidized loan, to enter into Shared Appreciation Mortgages (SAMs) with the distressed homeowners, or
2. Have the government itself enter into such arrangements (SAMs) with the distressed homeowners.

This would have removed virtually all risk of default. The rickety pyramid of derivatives would have been underpinned. The housing market would have been stabilized. People would be able to stay in their homes and schools. Neighborhoods would have been stabilized.

What a failure of imagination; what a failure to institute a pollicy with multiple winners.

I have one request of the Big Bankers. The Federal Government is willing to accept gifts to reduce the debt. We bailed you out in your hour of need with these subsidies. Now that banks are profitable, give back that money to the Treasury rather than paying it out in bonuses to executives; really the Treasury by providing those subsidies earned those bonuses.


Sent to New York Times

A Leadership Failure

My Cambridge Chronicle Op-Ed

Why not Reconciliation for Extending Tax Cuts

In all the talk about the repeal of the Bush tax cuts for the rich, there has been no discussion of the giant elephant in the Senate Chamber. No I don't mean Mitch McConnell and his fellow Republican obstructionists, there has been plenty said about them. I mean no one is talking about the possibility of passing the tax changes through the reconciliation process (No hits on the Washington Post website this month).

The original Bush cuts were passed under the reconciliation rules, why can't the Obama extensions of the poor and middle class be passed under these rules too? While we are at it, under reconciliation we could also extend unemployment benefits. Perhaps we could also provide additional funds to States, towns, and cities who have moved back into budget cutting and layoff modes.

Is it that forcing reconciliation would violate Obama's post partisan hopes? Forget it, these hopes have long been shattered. Or is it that the vote counters know that under reconciliation they would not be able to get a simple majority? If that is the case, let's force a vote and get all those Senators to show their colors.

Sent to Washington Post

Memo to Albany: It's Your Job

You applaud the Governor's proposal of a 2% across the board budget cut, saying, "That is the fairest way to go." (Memo to Albany: It's Your Job, New York Times, November 27, 2010: A14)

There are two problems with the across the board approach.

First, it is the lazy man's way of budgeting. It prevents one from taking a hard look at all the expenditures and making tough choices about which are justified and which can be cut.

Second, it is manifestly unfair. A Department that is running a tight ship with little slack will be badly impacted in its ability to deliver services. A Department that is fat and flabby will be able to maintain its critical activities by divesting less productive endeavors.

What Albany needs is precision and focus in its budgetary activities.



Sent to New York Times

Justice DeLayed

Justice DeLayed is Justice Denied.

Mr Delay was finally convicted of money laundering (DeLay Convicted in Donation Case by a Texas Jury, New York Times, November 25, 2010 A1

However there is no restitution for the voters of Texas. Indirectly, the money provided by Delay was used to support Republican candidates in the state office elections. They won control of the legislature and then, in an unprecidented between census redistricting, redrew federal House district boundaries to benefit their fellow Republicans.

In the subsequent election, the Texas delegation which had a small Democratic majority (17-15) swung decisively to the Republicans (21-11).

Are the Texas House victories won by Republicans to be declared invalid because of the tainted funding? Are the House district boundaries to be redrawn?

How can Texas be made whole again?

The GOP's lame duck Hardball

The GOP is mindlessly opposing the START Treaty (The GOP's lame duck Hardball, Washington Post, November 21, 2010)

The GOP has struck a blow in the war on terror; on the side of the terrorists.

A side benefit of the inspection regime of the Russian nuclear sites is the pressure on the Russians to keep these sites secure. Continued absence of American inspectors will result in a slackening of security and a greater ability for unscrupulous criminals to steal nuclear material from the sites and sell them to well funded terrorist groups.

What is it about nuclear security that the GOP leaders, with the honorable exception of Senator Lugar, do not understand?


Sent to Washington Post

Dual Pay Structures

Dual Pay structures are a bad idea (Unions Yield on Two-Tier Wage Scales to Preserve Jobs, New York Times, November 20, 2010: A1, B2).

They create major inequities between employees hired at different times. In our modern economy, we are told that collaboration between workers and between management and workers is essential for the development and manufacture of new products. The management of these companies will regret their coercive actions as these two-tiers pay scales will inhibit the development of a cooperative climate.

These lower pay scales for new hires will also contribute to the large income inequities in the country. It is the Tragedy of the Commons all over again. It may make sense for one company to improve its profitability (and the managers' bonuses) by cutting wages, but the enlarging of a large pool of people lacking purchasing power will do little to improve demand in the long run.


Sent to New York Times