Paul Krugman wins Nobel Prize for Economics.

Krugman is an unapologetic liberal so we can all be proud of Mr. Krugman, a frequent guest on Olbermann’s Countdown show. From the MSNBC writeup:

Paul Krugman, the Princeton University scholar and New York Times columnist, won the Nobel prize in economics Monday for his analysis of how economies of scale can affect trade patterns and the location of economic activity.

Krugman has been a harsh critic of the Bush administration and the Republican Party in The New York Times, where he writes a regular column and has a blog called “Conscience of a Liberal.”

He has come out forcefully against John McCain during the economic meltdown, saying the Republican candidate is “more frightening now than he was a few weeks ago” and earlier that the GOP has become “the party of stupid.”

I really love the last quote. Below is Paul Krugman on Rachel Maddow’s show from October 6th.

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Where were the regulators?

Wow! Last weekend will surely go down in the economic record books. According to the New York Times yesterday, a group of major banks is pooling $7 billion each to offset crises similar to the Lehman Brothers expected bankruptcy, indicating that,”Washington officials and Wall Street have grave concerns about future losses.” The U.S. Treasury and the Federal Reserve appear to be taking a harder line and temporarily relaxing some regulations at the same time. The Fed will accept more high risk collateral, “potentially putting more taxpayer money at risk.” The Federal Reserve has loosened the emergency loan standards for Wall street investment banks. In a stunning related story to that of the fall of Lehman Brothers, Merrill Lynch has agreed to be purchased by Bank of America.

The question on many lips is, where were the regulators? The answer is “lais·sez faire n.” Welcome to the wonderful world of rule by corporatocracy, begun by Ronald Reagan’s era of deregulation decades ago. What disappeared more recently under the Bush administration was the bedrock of ethics and plain common sense. According to About.com., laissez faire means:

An economic theory from the 18th century that is strongly opposed to any government intervention in business affairs. Sometimes referred to as “let it be economics.”Investopedia Says:
People who support a laissez faire system are against minimum wages, duties, and any other trade restrictions. Laissez faire is French for “leave alone.”

1. An economic doctrine that opposes governmental regulation of or interference in commerce beyond the minimum necessary for a free-enterprise system to operate according to its own economic laws.

Where was the Department of Justice hiding for all these years? For a while it was headed by Bush crony Alberto Gonzales, who was busy helping our current president expand his unitary presidency ambitions. Meanwhile nobody was watching the store. For example, an investigation by Paul Kiel from ProPublica was published on 9/8/08, with this headline: “DoJ: Credit Suisse Brokers Lied About Subprime Securities.” To quote (author’s links):

In one case, according to an SEC complaint against the pair also filed last week, they used $20 million of a client’s money to buy a security backed by mobile home loans. But in an e-mail to his client, Bulter changed the name of the security from “Greenpoint Credit” to “Greenpoint Student Assistance.” . . .

This is the second criminal case on Wall Street involving the subprime meltdown. Earlier this summer, the Justice Department filed its first major indictment, accusing two Bear Stearns hedge fund managers of misleading investors. The FBI is currently investigating 22 corporations involved in the subprime mortgage industry, FBI spokesman Bill Carter said. The FBI hasn’t named them. (See our overview of subprime-related investigations.)

Ethics violations* were in abundance in the Bush administration, where government regulation was an anathema. Investigative journalist from ProPublica, Paul Kiel wrote this on 9/10/08: “New Report Details Wide-Ranging Ethics Scandal at Interior Dept. Quote, “According to a series of reports sent to Congress today by the department’s inspector general, Interior employees rigged oil contracts, took money as oil consultants, had sexual relationships with oil and gas company representatives, and engaged in other misconduct.” The same story by Amanda on 9/11/08, was posted on AlterNet “Bush Administration Officials Rewrote Ethics Rules to Accommodate Partying#.” To quote:

According to the new Interior Department Inspector General (IG) report, nearly a third of the Denver Minerals Management Service’s 55-person office “received gifts and gratuities from oil and gas companies.” Several employees have tried to claim that they were unaware of federal ethics guidelines.

. . . RIK officials often bragged about the “RIK way of doing business,” which aimed to “be a part of industry.” In the summer of 2006, RIK employees wrote up a document titled, “Initiative to Clarify Guidance for RIK Interaction with Industry,” which would codify their “uniqueness.” In short, RIK officials wanted to rewrite the ethics rules to cover up their misdoings.

. . . In a statement today, House Speaker Nancy Pelosi (D-CA) criticized “how cozy the relationship between Big Oil and the Administration’s regulators have been,” which has “cheated the American taxpayer out of billions of dollars owed them by the oil companies.”

The ripple effect is being felt all over the country and will ultimately impact the upcoming presidential election, says Politico.com. You can bet that Senator McCain would continue with the cozy corporatocracy, despite any protestations to the contrary. Those of us who are a bit older remember McCain’s involvement with the Charles Keating scandal that resulted in the government bail-out of the savings and loan industry. My belief is that Senator Obama will demand much more accountability. By Mike Allen, the opinion is headlined, “Bank meltdown wallops campaigns.” To quote:

America’s banking instability could upend the final 50 days of the presidential campaign, with both candidates forced to confront a calamity that has gotten only glancing attention during the first 20 months of the race for the White House.

Red flags about the nation’s economic infrastructure have been popping up at least since the collapse in March of the investment bank Bear Stearns. But neither Sen. John McCain (R-Ariz.) nor Sen. Barack Obama (D-Ill.) has talked in detail about the potential consequences for voters and the government.

Until now, the crisis seemed like a confusing Wall Street story. That all ended with the fast-moving events of Sunday, which The New York Times called “one of the most extraordinary days in Wall Street’s history.” A CNBC special report on Sunday night called it “a complete realignment of Wall Street.”

A few senators are still plugging away trying to make things better. The news from The Raw Story (9/10/08) is that, “Sen. Feingold to hold hearing on ‘Restoring the Rule of Law’#.” Several planned witnesses include various experts, law professors, historians and advocates to provide input as to what remedial actions the next president and Congress should take. The hearing will be held September 16, so watch for it tomorrow. To quote:

Senator Russ Feingold (D-WI), Chairman of the Senate Judiciary Committee’s Constitution Subcommittee, has announced a hearing on how to best prepare the next president to foster an environment of accountability and responsible use of power seen lacking in the years President Bush and Vice President Cheney have been in office.

Next week the Subcommittee will hear testimony from legal and historical experts on what actions the next president and Congress need to take in order to “repair the damage done by the Bush Administration to the rule of law.” The purpose of the hearing is to give the next president the “full range” of proper guidance in restoring and maintaining checks and balances in areas such as wiretapping, interrogations, government secrecy, violations of privacy, detention policy, proper use of executive power and efforts to not mislead Congress.

The country will be watching and holding its breath that the Wall Street woes will not end in a complete meltdown of our financial system. Would that the regulators and ethics watchdogs had made appearances long ago when problems were apparent. It did not have to reach this level of crisis. Credit Republicans for this, as you are holding your breath — and your nose.

Hat Tip/Key to regular contributors Jon-# and “betmo“-* for the marked links.

(Cross-posted at The Reaction.)

My “creativity and dreaming” post today is at Making Good Mondays.

Technorati tags: news news and politics politics bush mccain wall street financial economics

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Inflation at its highest rate in last 17 years.

I read Dean Bakers columns over at CEPR. He helps me to understand how all the ups and downs of prices for goods and services that are fucking us all in the ass six ways from Sunday. From Mr. Bakers newest column this morning via my email:

“The annual rate of inflation in the CPI has been 10.6 percent over the last quarter.”

The overall CPI rose 0.3 percent in July, as a 1.2 percent jump in apparel prices, coupled with unusually large increases in communication and recreation prices led to a larger than expected increase. The core index has now increased at a 3.5 percent annual rate over the last quarter, up from a 2.5 percent rate over the last year.

To have a hike of 10% over a lousy quarter, well folks, this is unheard of. When the LAT gives us a headline like this: High energy costs hike consumer prices in July; inflation up, then goes on to give us this tag line at the top of their article:

The inflation rate, at 5.6%, is the highest in 17 years, a Labor Department report says.

You know the shit is hitting the fan m’dear readers. Since wages have been stagnant for over a decade…This ain’t good news any way you slice and dice it.

Yet we get fuckwits like the WSJs Phil Izzo telling us that it’s no big deal really…all his financial pundits weigh in with…don’t worry, be happy we can explain it all away crappola…it makes me wanna go postal.

We do not live in their world..and they sure as shit don’t live in ours. That’s why we need folks like Dean Baker to wade through all the bullshit and give it to us straight.

Crossposted at Bring it On!

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