Relevant and even prescient commentary on news, politics and the economy.

Mike Kimel vs. Yves Smith

I and many others, including Yves Smith, waded into the thicket of Mike Kimel’s provocative generic and specific-reasons-for-the-generic claims in his post here earlier this week titled “Negative Effects of Immigration on the Economy.”  I and others, including academic economist Barkley Rosser, commented in replies in the Comments thread to Mike’s post.  Yves did so on her Naked Capitalism blog, in prefatory comment to her republication of Mike Kimel’s post.

Yves is an expert on such matters as the effects of immigration on the economy.  I, suffice it to say, am not.   But Angry Bear Bruce Webb and I both invoked Yves’ prefatory comment as refutation of Mike’s specific reasons for his generic claims.  But Mike begs to differ, claiming that Yves’ preface is in agreement with his post.

To which I replied:

You and Yves Smith make the same point? Really? Actually, Yves was trying gently to refute your main point, which was your claim that immigration has a negative impact on job creation and your attributing this to the fact that so many immigrants aren’t white and from Europe and therefore, culturally (and intellectually) don’t sufficiently appreciate the importance of such things as time schedules and promptness.

Yves’ point was the opposite: that lower rates of job creation comes from lower rates of increase in GDP, which has nothing to do with the entrepreneurial, timekeeping and English-language skills of the current wave of immigrants and everything to do with the highly successful corporate efforts in the last nearly four decades to suppress wages–one (but only one) tactic of which has been the use of immigrants to keep wages down, thus reducing DEMAND FOR GOODS AND SERVICES. The effect on job creation is, contrary to your claim, not direct and is not the result of what you say it is, and is the indirect result of deliberate corporate goals.

Funny, y’know, but Germany, Holland, Scandinavia and Canada all have had very large non-white immigration in recent decades. All have strong laws supporting worker power, as well as corporate cultures that favor long-term investment and rational executive-suite compensation, and … voila! They have economies that work well.

Obviously, Yves can speak for herself on this if she cares to.  But it’s clear from the comments in the lengthy Comments thread to Mike’s post that I’m far from the only one who takes strong issue with what is at the heart of Mike’s premise.

This is by no stretch the type of thing I normally post about, but it gets to the heart of what others do, here and elsewhere, and certainly concerns issues at the forefront of this election cycle.  And therefore it’s worth my walking out onto this limb here.

 

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The Bizarre and Manipulative Crusade by Centrist NYT Columnists to Persuade Clinton to Adopt the Republican Fiscal and Regulatory Agenda – [with update]

All the experts tell us not to pay too much attention to polls for another week or two. Still, it does look as if Hillary Clinton got a big bounce from her convention, swamping her opponent’s bounce a week earlier. Better still, from the Democrats’ point of view, the swing in the polls appears to be doing what some of us thought it might: sending Donald Trump into a derp spiral, in which his ugly nonsense gets even uglier and more nonsensical as his electoral prospects sink.

As a result, we’re finally seeing some prominent Republicans not just refusing to endorse Mr. Trump, but actually declaring their support for Mrs. Clinton. So how should she respond?

The obvious answer, you might think, is that she should keep doing what she is doing — emphasizing how unfit her rival is for office, letting her allies point out her own qualifications and continuing to advocate a moderately center-­left policy agenda that is largely a continuation of President Obama’s.

But at least some commentators are calling on her to do something very different — to make a right turn, moving the Democratic agenda toward the preferences of those fleeing the sinking Republican ship. The idea, I guess, is to offer to create an American version of a European-­style grand coalition of the center­-left and the center-­right.

I don’t think there’s much prospect that Mrs. Clinton will actually do that. But if by any chance she and those around her are tempted to take this recommendation seriously: Don’t.

No Right Turn, Paul Krugman, New York Times, Aug. 5*

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What Bernie Sanders is doing to help Hillary Clinton [UPDATED]

One charge against Sanders by the likes of Paul Krugman that I just could not abide—there were others, but this post is about this one—was that while Clinton was actively soliciting campaign funds for the Democratic Party to use for down-ballot candidates, Sanders was not.  In a post here about that a couple of weeks ago I pointed out that Sanders and his campaign will be playing a large role both in soliciting campaign funds from ordinary individuals for down-ballot campaigns—especially congressional campaigns—simply through ActBlue.com’s huge database of Sanders donors, and that in fact those solicitations already had begun.  ActBlue.com is the organization that Sanders donors use to make their donations.

I also said that Sanders will play a large part in garnering support for Senate and House candidates simply by noting as he campaigns with candidates that he remains a senator and he, Elizabeth Warren and the other few real progressives in Congress need a Democratic-controlled Congress for their policy proposals to get heard in Congress.

Today I received this email message:

Beverly —

As Democrats, we believe that no one who works hard every day should have to live in poverty because they’re paid a minimum wage that’s too low. We know that climate change is a challenge we must confront. We believe no young person should have to spend so much on a college education that they end up shackled by years of debt.

And we know that we can never, never allow Donald Trump to become President of the United States.

Will you donate $3 or more today to help keep that from happening and to elect Democrats who will fight for everything we believe in?

If you’ve saved your payment information, your donation will go through immediately.

QUICK DONATE: $3

QUICK DONATE: $10

QUICK DONATE: $25

QUICK DONATE: $50

QUICK DONATE: $100

Or donate another amount.
Any Republican president would put President Obama’s progress on economic security in danger, make moves to repeal health care reform that millions of Americans are now relying on, and try to move backwards on the steps we’ve taken these past seven years to make our country more equal and more fair.

But it’s clear that Trump — with his repugnant attitude toward women, immigrants, Muslim-Americans, and pretty much anyone he comes across — is the worst of the bunch.

We’re going to be going up against him this fall. So right now, I’m asking you to pitch in $3 or whatever you can so that we can stop Donald Trump and his fellow Republicans:

https://my.democrats.org/Stop-Donald-Trump

Thank you,

Hillary

­­­____

Paid for by the Democratic National Committee, 430 South Capitol Street SE, Washington DC 20003 and not authorized by any candidate or candidate’s committee. Contributions or gifts to the Democratic National Committee are not tax deductible.

There is, I believe, no way that the Clinton campaign would have my email address—that ActBlue would forward it to the Clinton campaign—unless the Sanders campaign agreed at the Clinton campaign’s request to allow it.

Me?  I’m delighted.  I’m with him.  But I’m also now with her.  There’s no conflict there; she will be the nominee, and he will play a large role in policy matters, during the campaign and during the Clinton administration.

As for the message itself, I think the tone was pretty near perfect at this stage, as an opener.

I think Clinton has made some serious blunders in the last few days.  I have no idea why, for example, she thinks she needs to do anything affirmative to gain the votes of moderate Republicans, least of all by rehashing what everyone already knows about Trump.  Just as I don’t know why she thinks women who place a great deal of importance on electing a woman as president need to reminded that she is one and if elected will be the first.  I don’t share her fondness for highlighting the obvious or the already-very-well-known.

And her decision to court, in personal phone solicitations, no less, Republican donors, as the NYT reported two or three days ago—Wall Street ones and others—is stupefying.  Money for TV ads and the like will be far less important than handing Trump, who apparently now expects to be mostly self-funding his campaign because there aren’t all that many Republican donors who want him elected, such tangible campaign arguments to make in his own TV commercials and at his rallies and in interviews.  Trump is a New Yorker; he probably reads the New York Times.  (Well, okay, Paul Manafort probably reads the New York Times.)

Like ordinary voters—actually, even more so, probably—these donors will decide to support Clinton, or not, based not on Clinton but on Trump.  But that is less likely to be so for many Sanders supporters than for most other voters.  Her campaign priorities are skewed here, illustrating yet again her lack of agility in recognizing the differences between this campaign year and, well, others.  Jeb Bush had record amounts of money.

But this post is about Bernie Sanders and his campaign.  And I’m happy that he and it took the step they took.

And I’ll offer this tip to Clinton now that I’m WithHer: A key to beating Trump is to point out that on fiscal and other domestic policy at least, the election contest will not be to determine whether there will be another President Clinton or instead a President Trump.  There will be either a new President Clinton or a President Manafort.

Every time Trump tries to hint at the beginning of a back-away from Conservative Movement fiscal and other domestic policy, and toward some genuine economic-populist fiscal and anti-Chamber of Commerce regulatory policy, Edgar Bergen, er, Paul Manafort, quickly aborts it.

This will be a source of amusement for me going forward, although less so if Clinton fails to note this early and often, whether for fear of losing campaign donations or otherwise.  And less so still if she appears to be running as President Manafort Light.

____

UPDATE:  Yikes.  Yves Smith posted this comment at Naked Capitalism:

What Bernie Sanders is doing to help Hillary Clinton Beverly Mann, Angry Bear. I am posting this only because I am just about certain this is wrong. Mann is almost certainly correct on her opening point, Sanders will help on downticket Democratic party races, but I assume he will help only ideologically aligned Dems, not the remaining Blue Dogs. But if these Congresscritters are to the left of Clinton, they could serve to keep her honest (or more accurately, less dishonest) rather than “help” her. But I am certain she is wrong about her getting an anti-Trump DNC message via Bernie sharing his list with her. First, I am told by someone in the Sanders operation that Sanders will not do that (although there is the risk that his list is hacked or stolen). Second, I have given to Sanders via ActBlue and have gotten no such message. Third, as a blogger, I have gotten DNC propaganda upon occasion, including solicitations, before I gave to Sanders (and I haven’t given to anyone save a couple of locals via check since I gave a mere $20 to Obama as a result of seeing Palin’s acceptance speech). Every time I unsubscribe. Mann has written often about Clinton and Sanders, so I suspect she got added to the list that way.

Sooo … I was wrong in my assumption about the underlying source of that DNC email to me.

Meanwhile, reader EMichael linked in the Comments thread to this article today by Matthew Yglesias at Vox.  I responded to EMichael’s comment:

Nice article. Thanks for linking to it. I don’t read Vox; I don’t care much for it. So I probably wouldn’t have known of the article otherwise.

I’m really glad to see someone with a high profile say what I, a low-profile type, have been saying here at AB for weeks now.

The Yglesias article is titled “The real reason Bernie Sanders will enthusiastically back Hillary Clinton in November.”

So I guess the bottom line is that Sanders indeed is helping Clinton, just not directly.  Not yet.

Added 5/10 at 12:14 p.m.

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Blackie, in Wantagh, NY [Sweet dog still needs a home. 8/23]

I see so many listings about older dogs whose owner can no longer care for him or her, usually because of finances. I just received this sweet, touching email notice,* from Hempstead Animal Shelter in Wantaugh, NY (Nassau County), via RescueMe.org, and thought I’d pass it along.

*Corrected link, thanks to Noni Mausa.  A note has been added to the listing since earlier today saying: “URGENT: This animal could be euthanized if not adopted soon.

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 UPDATE: Yves Smith has now linked to this post, under the topic “Class Warfare”:

Blackie, in Wantaugh, NY Angry Bear. Another sad reminder of the costs of the crisis.

Metro New York City is a huge place. There must be many people who can, and would be happy to, adopt this sweet dog. So thanks, Yves, for publicizing my post.  And for making the point you make.

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SECOND UPDATE: Blackie was adopted today!  See the Comments thread below. 8/20

THIRD, SAD, FRUSTRATING UPDATE: Please see my second post on this, above.

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I keep wondering: Is anyone under the age of 40 ‘Ready for Hillary’?

Yves Smith linked this morning on her Naked Capital blog to my post from yesterday called “The Secretive Democracy Alliance’s Secret Is Out: Some of its members are elitist, racist and self-serving,” and added a comment about it:

Helpful, but does not follow the logic to the obvious conclusion. Why is the Dem apparatus harping on the Kochs and not issues that would motivate voters, like more jobs, better access to housing and education? Because they’ve done nothing on those fronts and don’t intend to. […]

The link and Yves’ comment “pinged back” as a comment to my post.  In response to Yves and to a comment by Daniel Becker, I wrote:

My intended point, Yves, was that harping on the IS harping on the issues that would motivate voters, like more jobs, better access to housing and education.  Steve Phillips, et al., think that only white men and married white women are smart enough to understand the connection between politicians’ financial benefactors and those politicians’ proposed legislation and attempts to block legislation.  I think Phillips is wrong.

The failure of the Obama administration–courtesy largely of Tim Geithner and of Obama’s weird infatuation with him throughout Obama’s first term, but also to Obama’s laconic, detached, I’m-a-centrist! persona–to propose and then fight for substantial Keynesian fiscal policies and for other progressive policies–is not, say, Nancy Pelosi’s, or Dick Durbin’s, or Sherrod Brown’s, or Tom Harkin’s fault.

And, yes, the very last thing that the Dems need is yet another presidential nominee who’s never had an original policy idea in her life; who almost never takes a policy position that actually leads rather than follows (and in the one instance in which she did–drivers’ licenses for unauthorized immigrants–scrambles and backtracks at first sign of political harm to her; who spends her time posting to a silly Twitter account and trying to enhance her personal persona rather than ever, ever, ever actually thinking about and offering specific domestic policy proposals; and who apparently can’t function without the constant presence of an entourage of her “people,” i.e., her devotees.

How many other Secretaries of State had a constant go-fer?  How many other FORMER Secretaries of State brought along that same constant go-fer after leaving office? How many couldn’t manage without one?

I keep wondering: Is anyone under the age of 40 “ready for Hillary”? Best as I can tell, the answer is, no. What people ARE ready for is a politician–like Durbin, Harkin, Elizabeth Warren, Sherrod Brown, the former two who are too old to run for president, the latter two who don’t appear interpeted in doing so–who doesn’t have a Twitter account, or a personal entourage, or a daughter whose parents thought it was a good idea for her to sell her celebrity name (and nothing more) to a network news program for a huge amount of money, and talked their daughter into doing that.  Someone, in other words, who’s not famous for just being an ‘icon’, but who has built a mostly-quiet career as an economics populist in Congress or academia.

And, Daniel, I, like you, still cringe, as I did in 2008, at a campaign run almost entirely on a promise of Hope and Change, the substance of which the candidate never specified because he himself had no particular person convictions or policy ideas.  We don’t need another such standard bearer–not even one who replaces Hope and Change with WOMEN! WOMEN! WOMEN!  One Dem presidential candidate, and Dem president, of that ilk is more than enough, thank you very much.

Daniel, I think you and Yves have it backwards. The Dems can’t show progress in policy BECAUSE of the billionaire-controlled campaign-finance system.

So now I’ve gotten it off my chest.  It, being my dismay and utter frustration at the silly Hillary-or-bust obsession of the seemingly hypnotized Establishment Democrats and pundits.

This woman has written a narcissistic book for which she was paid handsomely-being paid handsomely appears to be her primary concern–and is in the process of blowing her book-tour interviews.  Which is nice, because now maybe–just maybe; it’s by no means certain–some actual longtime progressive policy person of some political stature, who doesn’t have a Twitter account or a personal entourage, and is not entirely self-obsessed–will step forward and run for the Dem presidential nomination, on a platform that details policy rather than relies upon personal celebrity and gender.

Hope springs eternal. Although the Kochs, the Chamber of Commerce, and some hedge fund folks have noticed, few political journalists–and apparently no Dem pols and political consultants–have.  This country is suddenly moving rapidly toward a progressive economic-populist era.  Instead, the over-40 professional political crowd thinks that the political sun rises and sets each morning with Hillary Clinton’s personal appearances and Twitter comments.  It doesn’t.

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Post edited slightly for clarity after posting. 6/25 at 3:58 p.m.

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Yves Smith will be on Harry Shearer’s Le Show today (Sunday)

Yves Smith will be on Harry Shearer’s Le Show today (Sunday), originating at 1 pm ET live on many public radio stations, and aired on many others throughout the day. Good streams are available all day, each hour, at publicradiofan.com. The topic is the Independent Foreclosure Review fiasco.

(check local listings here…)

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Innovation and production

 Yves Smith points to a MIT study on how much bigger the conversation should be than the political arguments of offshoring and outsourcing suggest.  And the complexities of applying ‘just in time’ sorts of global production systems through a complicated supply chain.

From that post is this excerpt:

And a new report by MIT on innovation and production (hat tip Marcy Wheeler) has an almost desperate undertone. It starts by pointing out how the data understate how bad the competitive erosion is:

One of the key danger points identified in these reports is the declining weight of the U.S. in the global economy. Even though the U.S. share of world manufactured output has held fairly steady over the past decade, economists have pointed out that this reflects good results in only a few industrial sectors. And even in those sectors, what appear to be productivity gains may be the result of underestimating the value of imported components. A close look at the composition of a worsening trade deficit shows that even in high-tech sectors the U.S. has a deteriorating picture. While the output of U.S. high tech manufacturing is still the largest in the world and accounted for $390 billion of global value added in high-tech manufacturing in 2010, U.S. share of this world market has been declining, from 34 percent in 1998 to 28 percent in 2010, as other countries made big strides ahead into this market segment.
Jobs are another huge concern. The great spike in unemployment over the past five years was disproportionately due to loss of manufacturing jobs. And as the economy revived, such jobs were very slow to return. In fact it is clear that many of them never will.

It makes clear how far hollowing out has gone in the manufacturing sector, and how the economy has lost so many components critical to innovation that it isn’t clear how to restore them. The researchers went beyond the venture capital darlings to find what it called “Main Street Manufacturers.” It found they were at a serious disadvantage due to the lack of firms with complimentary know-how in their ecosystem. After quoting the experience of one firm, the authors noted:

Read more at Naked Capitalism

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New Ruling on Mortgage Putbacks a Potential Huge Win for Banks

Yves Smith discusses New Ruling on Mortgage Putbacks a Potential Huge Win for Banks

Even though, for most people, the housing crisis is a thing of the past, the fight over who should bear the cost of sloppy and openly fraudulent mortgage origination and securities sales continues to grind through the courts.

We’ve written now and again about mortgage putback cases, which are also called representation and warranty, or “rep and warranty” litigation. Investors in mortgage-backed securities were not quite as dumb as the crisis aftermath had made them look. The sponsors of the securitizations made promises in the offering documents (called representations and warranties) about the quality of the loans. It turns out they lied.

Normally, when a loan is found to be worse than the sponsors promised, the remedy is a putback. The originator is required to take the bad loan back and replace it, either with cash or buy replacing it with a loan that was of the quality that the investors were promised. However, the mortgage securitizations put hurdles in front of the investors: it took a minimum level of investors (usually 25%) to demand putbacks and it was hard for any investor to know who else had bought a particular deal. Even then, the trustee (who was the party who was responsible for putting back the loan) almost always ignored and fought investor putback requests. They have ongoing relationships with the sponsors, so they don’t want to ruffle big meal tickets, plus the margins for acting as a mortgage securitization trustee are thin, so they don’t lift a finger unless they absolutely have to…

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Is the $8.5 billion Foreclose and Fraud Settlement Enough of a Penalty?

by run75411

Update: Besides not prosecuting particulars who promulgated much of 2008, what makes this settlement bad is letting banks off the hook:

“In the settlement announced Monday between the Federal Reserve, the Comptroller of the Currency and ten of the largest banks and other mortgage providers, the government gives up the right to prosecute banks for past wrongful foreclosures. In exchange, the banks part with another $8.5 billion, of which $5.2 billion is for loan modifications and $3.3 billion is for people whose mortgages were wrongfully foreclosed.

It’s a pittance. With 3.8 million homeowners covered by the settlement, that works out to less than $2,000 per homeowner.” http://prospect.org/article/banks-win-againThe Banks Win Again”

$2,000 per homeowner in many cases might be two months of a mortgage payment. The settlement hardly qualifies as major.
Is the $8.5 billion Foreclose and Fraud Settlement Enough of a Penalty?

Are The Federal Reserve and the OCC acting in good faith in letting banks off the hook for their past predatory lending practices? Yves Smith at Naked Capitalism labels it a sellout at the expense of mortgage holders: $8.5 billion Foreclosure Fraud Settlement: Yet Another Loss for Homeowners Touted as a Victory.

When compared to TARP and other programs created to save TBTF and STBB (soon to be banks) plus the trillions pumped into the economy as a result the failures of banks and Wall Street, the $8.5 billion does seem paltry in comparison. Rather than taking the lead and closely auditing the review of wrongfully foreclosed mortgages and past practices, the OCC once again lets banks off the hook by giving them the ability to independently review both issues. Haven’t we come this way before? Banks will not do it or will be selective in what they choose to disclose. Besides the history of banks failing to act in good faith, there is also a history of government agencies and branches failure to provide consumer protection.

It appears the dogs causing much of this debacle are kicking back their hind legs in an attempt to hide the droppings left behind because of their failures. Frankly, it is amazing the OCC is still in that mode of protecting thrifts and national banks, which caused much of the issue in the last decade after they were identified as the culprits who failed to regulate. For those who may not be familiar with the OCC’s lack of supervision, I would offer Columbia’s “The Audit” as a refresher: Let Sleeping Dogs Lie.

To finalize and give strength to the OCC limited supervision (2007) of National banks and thrifts, SCOTUS over ruled states attempting to fill the void in regulating predatory bank lending practices. In a 5-3 ruling, SCOTUS tied the hands of states which attempted to regulate banks supervised by OCC. Michigan was joined by numerous states in an effort to control predatory bank lending.( Banks Win Shield From State Regulation at High Court)

A mixed bag of conservative and liberal justices ruled on Watters vs Wachovia Bank in the same manner as over turning State Usury Laws in Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp in 1978. SCOTUS cited the National Banking Act to give the OCC the capability to regulate national banks and thrifts over turn state regulations. . The irony is Congress moving quickly to repeal Glass Steagall and change the National Banking Act to allow Citibank to merge with Travelers Insurance; but, Congress saw no need to act to allow states to continue the regulation of national banks. Both actions by SCOTUS and the failure of Congress to pass new legislation have contributed much to the issues we have today. Always look to the money . . .

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