Author Nick Hanauer doesn’t believe that capitalism is inherently bad, but rather that it is an essential part of a larger ecosystem that we haven’t yet figured out. “Job creators” is constantly used when talking about the economy, but what does that really matter? And are they really solely responsible for spurring our economy on?
Daniel Gross, editor and columnist at Yahoo! Finance and the Megapanel debate whether France and Germany can agree to fund a Greek bailout. You can check out Daniel on Twitter, as well as at his Yahoo! Finance blog Contrary Indicator.
Following days of violent and fiery protests, it’s shaping up to be yet another crucial week for the Eurozone debt crisis. The talk now is about more than doubling the size of the bailout for the banks — not just the European banks, but also the Western banks have extended a wide variety of credit to a lot of Western Europe.
There’s a lot of additional speculation on top of that as to who will pay for what, and instead of $600 billion, Greece now says they need $1.3 trillion. Any bailout is almost certain to be coupled with austerity matters, and could be coupled with tax hikes and debt restructuring. As one Greek trader told a Business Insider, “the painful problem of austerity hasn’t even hit yet. Nobody in Europe has any idea what’s going on, and social strife, if it seems bad now, will become a daily issue.”
When looking at the Greek debt crisis, Daniel says making a comparison to 2008 in the U.S. is worthwhile. “It’s kind of useful to compare what we did here in ’08 and ’09. There’s a lot of criticism of how things went down. Basically, the Federal Reserve came in and said, “we will guarantee everything in sight, stop running from the banks, the government said, we’ll do some stimulus, and both said to the private sector, we’ll keep rates low, but you’ve got to get your house in order. Take some losses, fire people, restructure.”
“But a lot of that is now behind us,” says Daniel. “The TARP money came back, banks are back to doing their thing — in Europe, someone needs to do that. Guarantee everything.”
Daniel says that the ECB has to take the reins and do that, but it won’t be without challenges. He also doesn’t mince words when it comes to his take on European leadership.
“The problem is then, “get your house in order.” Because America’s companies are pretty ruthless about firing people, shutting down a division, offshoring. Europe’s government, I mean, Italy? They’re going to get their house in order? They’ve got a 75-year-old satire running the show. Greece is going to get their house in order? That is the problem. People say the ECB hasn’t done what needs to be done. They come in and say, we will guarantee, no one has to worry about anything, we will print as much money as needed, but the thing that has to happen after that is structural reform in these government-run countries to get their house in order,” says Daniel.
Panelist Tim Carney asks, “So to what extent are the bailout talks focused on actually saving the banks and not just preventing a disorderly collapse?”
Daniel says “This is motivating the whole thing. The Germans will say, you know, that the Greeks, they have done wrong, and they need to be punished and they have to feel the pain. It’s all about Angela Merkel not having to bail out her own banks. If Greece says, you know what, we’re all going to pay 40 cents on the dollar, all of a sudden, all these large German banks– and they pick up the phone, and they call the government. which then has to do a taxpayer bailout for their own domestic banking industry, Which is far more unpopular, and that’s not politically tenable.”
Is Greek default inevitable? Daniel says that “I think it’s pretty much already happened. They can’t borrow on the private market. They can’t go out to the public markets and say, you know, we’d like to borrow a few billion dollars. And the debt that trades, it trades at interest rates that would make a loan shark blush. In other words, the interest rate on the one- and two-year government debt is 70%, 80%.”
He concludes, “It’s like the Monty Python skit, what we have here is a defaulted bird.”
Yahoo’s! Daniel Gross on Greek Default: “It’s Pretty Much Already Happened” October 24th, 2011Dylan Ratigan
This week we kick off our “Mad As Hell” series, “Get Money Out!” along with our friends at The Huffington Post. It all comes down to one underlying problem — money’s undue influence over our political system.
We know Americans are fed up with their politicians and the special interests that fund them. But how did we get where we are today — with Washington separated from voters by a wall of cold, hard cash?
Take a look at the numbers:
In 1976, presidential candidates spending totaled $67 million.
In 1976, winning House candidates spent $87,000 on average.
In 2008, presidential candidates spent a total of $1.3 billion.
In 2008, it cost over $1.5 million to win a House seat.
Those number may look huge, but they’re going to continue to grow. By 2012, spending just on the fall elections is projected to reach over $6 billion.
Where is that money coming from? Prior to the 2010 election, key industry sectors, like finance, gave more to republicans than democrats. In 2006 and 2008, it flipped, with Wall Street giving more to the victorious Democrats.
Back before the “money switch” turned democratic, in 2004 Wall Street preferred George Bush to John Kerry. There was so much money flowing that President Bush openly joked about it at the 2000 Alfred E. Smith Memorial Foundation Dinner, telling attendees, “Some people call you the elite. I call you my base.” (If you missed that speech, here’s the clip.)
All this money had a serious impact on decision making during the financial crisis. When politicians had to vote on a $700 billion bailout to Wall Street, both parties picked donors over voters.
But money in politics is not a new problem — it all started back in the 1970’s. New television and new direct mail techniques were driving up the cost of congressional campaigns. Meanwhile, Congress was trying to control money in politics and clamp down on Nixon-era abuses. It put limits on what candidates could raise, and spend.
But the Supreme Court, in a 1976 decision, Buckley v. Valeo, ruled that Congress could only limit contributions, not spending. Money, said the court, is speech. The court would continue chipping away at campaign finance regulations for years to come.
Pretty soon, the first wave of television friendly republicans swept into office in 1978. A young Newt Gingrich saw how the fundraising vehicles called Political Action Committees could be used to build their own power.
Congressional leadership had been based on seniority, but it soon became based on fundraising prowess. And eventually, these republicans took the majority.
The money wave was bipartisan. In 1982, it was a congressman named Tony Coehlo who brought new business PAC money into the Democratic Party. By 2002, the situation was so outrageous that Sen. John McCain and Sen. Russ Feingold were able to pass a bill to restrict contributions to the political parties.
But this opened up a loophole for “soft money” to go directly to outside groups. By 2004, there was so much money in politics that massive donations from individual billionaires – T. Boone Pickens on the right and George Soros on the left – had turned politics into a sport for billionaires. And in 2010, the Supreme Court, in a controversial decision called Citizens United, gutted most remaining campaign finance restrictions, saying that corporations and unions could put unlimited sums of money directly into elections.
President Obama slammed the decision in his 2010 State of the Union saying, “the Supreme Court reversed a century of law to open the floodgates for special interests – including foreign corporations – to spend without limit in our elections.”
Today, we’re in a new era of American democracy where debate is shaped and controlled by well-monied forces not on the ballot. Our hope is that by shining a light on the issue, we can begin to fix it.
–Mary Murphy is a producer for The Dylan Ratigan Show.
Money and Politics: How Did We Get Here? September 30th, 2011Dylan Ratigan
Dr. Peter Morici writes about the huge influence financial firms have had in shaping federal trade policy, and how their outsized influence may be holding America back from any meaningful economic recovery.