November 14 2008 show notes
Nov. 18, 2008 11:17 pm
By Thom Hartmann A...
- "Brunch with Bernie" with Senator Bernie Sanders, Independent of Vermont.
- Guest: Ravi Batra, professor of economics at Southern Methodist University.
- Guest: Al Franken. His Senate campaign against Republican Norm Coleman in Minnesota.
- Upcoming Event: Nov 21, 11:00 am Discovery is airing their film about Lamar Waldron and Thom's book Ultimate Sacrifice. Next week Vanity Fair will have an exclusive article about their new book, "Legacy of Secrecy: The Long Shadow of the JFK Assassination".
- Guest: Lamar Waldron, Thom's "Ultimate Sacrifice" and "Legacy of Secrecy" co-author.
- Guest: Former Alabama Governor Don Siegelman. Recent revelations in Time magazine.
Topics, guests, upcoming events, quotes, links to articles, audio clips, books & bumper music.
- "Brunch with Bernie" with Senator Bernie Sanders, Independent of Vermont. The economy is in free fall. Some headlines:
- Crisis Spreads to Tech Sector as Sun Plans to Cut Work Force
- Big Drop in Retail Sales in October
- Floyd Norris: Consumers Retreat
- Euro Zone Officially Is in Recession
- Freddie Mac Posts $25.3 Billion Loss
- Wall Street Falls a Day After Rally
They said the economy is strong. What happened? Yesterday there was an article that said tax cuts cause bubbles, tax increases lead to steady growth for all. And Greenspan was "shocked". The role of government in economic systems. There must be a much stronger role. Regulate institutions, fairer and more equal distribution. There's a higher percentage of kids dropping out of high school because they know they need college to get on and they are struggling in school. How do you have a strong economy if you are not producing the goods that people need? If we bail out the auto industry, we need to restructure it. New auto workers are making much less, the older ones have been bought out.
The Democrats are waiting to see if they get a veto proof majority. Is it time to change the 17th amendment? Bernie is from a small state. The election was focused around 20 states, some sure states not visited. Change it and that would become the top 20 cities. They have learnt that crime pays, for example the S&L bailout, etc. Naomi Klein in The Nation saying that the bailout is an extension of the Iraq war; handing money to cronies. He does not know why they rejected credit card forgiveness. Usury legislation. The credit card industry might be the next in trouble. In the Financial Times it says that because Paulson changed the focus of the bailout, Libor went up. Bernie supports Equal Rights for American women, which Teddy Kennedy keeps introducing, but it is not the top priority at the moment. We must investigate, but holding people accountable will not be the top focus of attention because of the crises.
The suggestion has been raised of, instead of bailing out the auto industry directly, giving health care to all the auto workers, as a pilot for national health care. The auto industry fiercely resists the introduction of emissions standards as high as those elsewhere. HR 1509 Executive Branch Accountability Act 2008, Tammy Baldwin. The big oil companies knocked out the smaller ones; legislation to let them back in? Other industries. Too big to fail, so few controlling so much. The Fed is operating far from oversight. Thom wants to buy the Fed.
Congress is back next week. Stimulus package? Bush unsympathetic, Bernie is for spending on infrastructure, jobs. Auto bailout? He doesn't know how long the session will be, then they break until the new year and Congress. Build on grass roots and stand tall, it is necessary to stand up to powerful interests.
- Crisis Spreads to Tech Sector as Sun Plans to Cut Work Force
- "The Senate of the United States shall be composed of two Senators from each State, elected by the people thereof, for six years; and each Senator shall have one vote. The electors in each State shall have the qualifications requisite for electors of the most numerous branch of the State legislatures.
When vacancies happen in the representation of any State in the Senate, the executive authority of such State shall issue writs of election to fill such vacancies: Provided, That the legislature of any State may empower the executive thereof to make temporary appointments until the people fill the vacancies by election as the legislature may direct."
Amendment XVII, Bill of Rights.
- Article: In Praise of a Rocky Transition, Naomi Klein.
"Washington's handling of the bailout is not merely incompetent. It may well be illegal.
In a moment of high panic in late September, the US Treasury unilaterally pushed through a radical change in how bank mergers are taxed--a change long sought by the industry. Despite the fact that this move will deprive the government of as much as $140 billion in tax revenue, lawmakers found out only after the fact. According to the Washington Post, more than a dozen tax attorneys agree that "Treasury had no authority to issue the [tax change] notice."
Of equally dubious legality are the equity deals Treasury has negotiated with many of the country's banks. According to Congressman Barney Frank, one of the architects of the legislation that enables the deals, "Any use of these funds for any purpose other than lending--for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc.--is a violation of the act." Yet this is exactly how the funds are being used.
Then there is the nearly $2 trillion the Federal Reserve has handed out in emergency loans. Incredibly, the Fed will not reveal which corporations have received these loans or what it has accepted as collateral. Bloomberg News believes that this secrecy violates the law and has filed a federal suit demanding full disclosure.
Despite all of this potential lawlessness, the Democrats are either openly defending the administration or refusing to intervene. "There is only one president at a time," we hear from Barack Obama. That's true. But every sweetheart deal the lame-duck Bush administration makes threatens to hobble Obama's ability to make good on his promise of change. To cite just one example, that $140 billion in missing tax revenue is almost the same sum as Obama's renewable energy program. Obama owes it to the people who elected him to call this what it is: an attempt to undermine the electoral process by stealth."
- Article: U-turn casts shadow over credit markets.
"The Treasury's ditched effort to prop up mortgage-backed assets is casting a new shadow over the credit -markets and could trigger another wave of forced selling and losses.
Although the credit crisis has spread far beyond the original problems caused by higher-than-expected losses on debt backed by risky mortgages, the continued dysfunction and illiquidity in the $11,000bn mortgage-backed market still hangs over the financial sector."
- Bumper Music: What You Give Away, Vince Gill.
- Bumper Music: Free And Easy Down The Road I Go, Dierks Bentley (video).
- Bumper Music: The Door Is Always Open, Waylon Jennings.
- "Pressure is picking up in the demand for the Fed to outline what they have done with the trillions put into play and to disclose what their inventory of "assets" is. It is very bad for the Fed to refuse. Cooperation might actually cause a major embarrassment to the US dollar, and soon."
- Guest: Ravi Batra, professor of economics at Southern Methodist University, Dallas. Author of "Greenspan's Fraud: How Two Decades of His Policies Have Undermined the Global Economy" and "The New Golden Age: The Coming Revolution against Political Corruption and Economic Chaos".
Advice from Jim Sinclair and others. Bloomberg lawsuit. We have an Argentine style dollar crash in our future, which will destroy the debt like the Weimar Republic, Zimbabwe. Ravi does not give financial advice, because he is an economist and because of liabilities. Gold is a good buy right now. Buy gold shares, options. Big picture. Where are we at in the cycle? We're not at the bottom yet. Transition in time, nobody in charge, expect big falls December / January. It does not have to feel this bad. Reform the auto industry. The dollar could crash. The government should buy 60% of GM stock, at about $1.5 billion, sell it to the workers of GM very cheap, even give away, let them manage the company. Force out the current managers. The speed of the Argentine crash, within week. It will not be as bad in the USA because the rest of the world won't be able to sell to us if the dollar crashes, so they will support it. Is the carry trade the only thing propping up the dollar? It is a factor, the biggest factor is Goldman Sachs, Morgan Stanley's actions.
The role of the carry trade (speculation in currency). There are maybe $540 trillion in derivatives still out there webofdebt.com/. The GDP of the whole planet is $62 trillion, Paulson yesterday saying he won't do what Congress said, he has not populated the oversight board, not telling us what he is doing, putting money in other places. The Libor rate is up because of the "decision to abandon its plan to buy toxic assets". Goldman Sachs would make a forecast about oil, then borrow a lot of money and start speculating in oil, manipulating the market. They bought Euros too because they go up at same time, then gold. Then oil fell, they panicked and unloaded. The government is now giving them money. Paulson, etc. are ex Goldman Sachs. Oil may make a comeback.
Nouriel Roubini talking of a deflationary period? Ravi said we could have some inflation, and a slight fall in prices. They are creating $2 trillion which should create inflation after about a year. The dollar will fall, maybe crash. Inflation will heat up some into next year or 2010, but eventually it will fall sharply when the economy is really bad. Joe, a Sarah Palin republican, said to fix the economy they need to cut taxes not raise them, don't penalize success, the market is crashing, responding to Obama's election. The greatest period of growth was from the mid 30s to the 80s when the top tax rate was high. Ravi said Reagan did not cut taxes. Reagan cut income taxes for a small majority, but raised all the other taxes. The self employment tax is the biggest killer of small businesses, and he raised it 66%.
How can American industry compete without national health care? Ravi said either we have a national health care system, or we abandon free trade. Free trade has created the current recession and could cause a depression. He does not believe the Smoot-Hawley Act of 1930 caused the great depression. Wages are not rising, productivity is rising fast. Productivity is the main source of supply, wages are the main source of demand. When supply rises faster than demand then the only way to maintain the demand/supply balance is to create a lot of new debt, which we have been doing since Reagan. Wages are not rising because of free trade. As long as we have free trade we are not going to come out of it. "Bad Samaritans" book. Domestic content laws.
Economic democracy. Buy up 60% of the shares of GM, AIG and give them to the workers. Workers would cut their hours rather than fire anybody else. Thom passed the suggestion on to Bernie. If workers are managing their own companies, then wages go up with productivity. Why don't they make fewer cars, make them a pre-order item? The management did not pay attention to the public needs and tried to create demand for large cars. They would not have invested so much in SUVs if they were responding to public demand.
- Book: "Web of Debt: The Shocking Truth About Our Money System And How We Can Break Free", Ellen Hodgson Brown, J.D.
"Our money system is not what we have been led to believe. The creation of money has been "privatized," or taken over by a private money cartel. Except for coins, all of our money is now created as loans advanced by private banking institutions