Trash company's experiment turning restaurant leftovers into a saleable product

RANCHO CUCAMONGA - Those rib bones you left on your plate at Lucille's Barbecue may be a treat for your dog but they're also good for your garden. The Southern-style restaurant at Victoria Gardens, along with seven other eateries in the city, are part of a Burrtec Waste pilot program that takes restaurant food waste and turns it into rich, compost soil. "When they asked me if I was ready for the program, I told them I was ready yesterday," said Martin Rodriguez, general manager of Lucille's.

The pilot program is what government officials like to call a "win-win." Restaurants get their food waste hauled away for free, thereby reducing their total trash volume. Burrtec gets to expand its services and sell a new product - nutrient-rich dirt. When the program started, waste from Lucille's filled up three large trash bins and one recycle bin. Today, two months later, Lucille's uses two food waste bins, one recycle bin and one trash bin. The change has saved the restaurant nearly $500.

On a daily basis, Burrtec receives food waste from Lucille's, BC Cafe, Red Hill Coffee Shop, Panther Cafe at Chaffey College, Chili's, On the Border, Souplantation and Hometown Buffet. The kitchen scraps get mixed with green waste, which sit in large, covered piles. The batches get aerated and hydrated for three months.

"We just try to make a nice cohesive environment for bugs," said Richard Crockett, a Burrtec Waste general manager referring to organisms which break down the materials into compost. "As long as you create a nice environment for bugs, they'll do all the work."

At the tour of Burrtec's facilities, Councilwoman Diane Williams and Environmental Programs General Manager Richard Crockett gives a tour of the composting Thursday at Burrtec Waste Industries' West Valley Material Recovery Facility in Fontana. Manager Linda Ceballos stuck their hands in a pile of compost as others stayed back and made jokes about never shaking their hands. "It's just dirt," Ceballos said.

It's true, it's just dirt - high-demand dirt. Many residents are inquiring about buying this plant-friendly compost. For now, Burrtec is selling it in bulk to landscapers and other companies. But in the future, Burrtec plans to refine the product to sell to more customers.
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Excellent video on deregulation

Excellent video describing how deregulation caused the financial crisis we are experiencing.

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10 Reasons for Progressives to Feel Reassured About the Debt Package

The debt ceiling is being raised. We will not have another debt ceiling battle in 6 months.

Medicare, Medicaid and Social Security remain untouched — which would not even have been the case in President Obama’s first proposal.

$2.5 trillion in cuts, as opposed to Obama’s initial proposal of $4 trillion (to say nothing of Paul Ryan’s 6 trillion). Many of the cuts are in defense.

The super committee will have triggers to prevent deadlock.
The cuts are for over a decade and do not begin to take effect until 2013.
The Bush tax cuts expire in 2013.

Polls showed a majority of Americans wanted Obama to compromise more. He did. In the election, no one can say he is the unreasonable one. It is very easy to say the right is more than unreasonable. The Tea Party is reckless and dangerous and now everyone knows for sure.

Now we see why the 2012 elections are so important. America got what it voted for in 2010. If we want to reverse the disastrous policies George W. Bush instated and the Tea Party have kept in place, we have to turn this country around in the next election.
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It’ll Be an All-Cuts Budget “Deal” (Just Like California)

For many years now in California we’ve witnessed an extremist Republican minority in the legislature hold the state budget hostage through manipulating the “two-thirds rule” that allows a legislative minority to dictate to the majority whether any new revenues can be raised.

The debt ceiling gambit that Republicans in the House of Representatives have used to tie the U.S. government in knots in recent months is simply the California GOP’s tactic writ large.

Like Governor Jerry Brown and the Democratic leadership in Sacramento, President Barack Obama and the Democratic leadership in Washington will capitulate (after many paralyzing months of hopes for “compromise”) and enact an all-cuts budget with no “shared sacrifice” in the form of higher taxes imposed on the rich and corporations.

The debt ceiling “deal” might postpone the next budget confrontation past the 2012 elections, but it will shred social programs that serve working people and are vital to key Democratic constituencies, while tearing apart the broader social contract between the government and its citizens. (At a time when the otherwise gridlocked Congress and administration can pull together and pass with celerity $649 billion for one-year’s defense budget the debt ceiling fight is all about priorities in any case.)
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The Biggest Driver in the Deficit Battle: Standard & Poor’s

Standard & Poor’s didn’t exactly distinguish itself prior to Wall Street’s financial meltdown in 2007. Until the eve of the collapse it gave triple-A ratings to some of the Street’s riskiest packages of mortgage-backed securities and collateralized debt obligations.

Standard & Poor’s (along with Moody’s and Fitch) bear much of the responsibility for what happened next. Had they done their job and warned investors how much risk Wall Street was taking on, the housing and debt bubbles wouldn’t have become so large – and their bursts wouldn’t have brought down much of the economy.

Had Standard & Poor’s done its job, you and I and other taxpayers wouldn’t have had to bail out Wall Street; millions of Americans would now be working now instead of collecting unemployment insurance; the government wouldn’t have had to inject the economy with a massive stimulus to save millions of other jobs; and far more tax revenue would now be pouring into the Treasury from individuals and businesses doing better than they are now.

In other words, had Standard & Poor’s done its job, today’s budget deficit would be far smaller.

And where was Standard & Poor’s (and the two others) during the George W. Bush administration – when W. turned a $5 trillion budget surplus bequeathed to him by Bill Clinton into a gaping deficit? Standard & Poor didn’t object to Bush’s giant tax cuts for the wealthy. Nor did it raise a warning about his huge Medicare drug benefit (i.e., corporate welfare for Big Pharma), or his decision to fight two expensive wars without paying for them.

Add Bush’s spending splurge and his tax cuts to the expenses brought on by Wall Street’s near collapse – and today’s budget deficit would be tiny.
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Seniors' worries center on Social Security, Medicare

Ann Filippini relies on a $700 Social Security payment and a $100 pension each month to pay her bills.

With a potential U.S. government default looming, the 80-year-old Plains Township resident is worried she won't get her Social Security check next month.

President Obama said Monday night he could not guarantee that Social Security checks will go out as planned next month if Democrats and Republicans fail to reach a deal to raise the debt ceiling by Aug. 2. Social Security checks are set to be sent Aug. 3.

"I'm a nervous wreck because I don't have a penny saved. I just used that for everything. I don't get much," Filippini said Wednesday. "What are we supposed to do? How are we supposed to pay our bills?"

Filippini was one of several senior citizens at the Kingston Senior Center who expressed fears about threats from government officials to withhold Social Security checks.

"That's our livelihood," said Doris Thompson, 85, of Kingston, who said she relies solely on government entitlements - Social Security for income and Medicare for health coverage.

"It would really hurt financially," said Marcia Young, 64, of Plymouth. "You have to worry about paying your bills and buying medications."

Rachael Pollard, 70, of Plymouth, suggested that legislators cut their own "perks, retirement and lucrative salaries" as a way to cut spending.

"If they want us to sacrifice, let them sacrifice first," Pollard said. "The gas company, the electric company, the water company and everyone else keeps raising their prices. So what are the people who only get $700 or $800 a month going to do? Do they want to starve the old people to death or just kill them off because they can't afford their medicine? That way, they'll balance Social Security."

Read more: http://citizensvoice.com/news/seniors-worries-center-on-social-security-medicare-1.1181133#ixzz1TP5A4Ofy

The Question Conservatives Can't Answer

The following fact was sent to numerous conservative pundits, politicians, and profitseekers:

Based on Tax Foundation figures, the richest 1% has TRIPLED its share of America's income over the past 30 years. Much of the gain came from tax cuts and minimally taxed financial instruments. If their income had increased only at the pace of American productivity (80%), they would be taking about a TRILLION DOLLARS LESS out of our economy.

And a question was posed:

In what way do the richest 1% deserve these extraordinary gains?

This question was not posed in sarcasm. A factual answer is genuinely sought. It seems unlikely that 1% of the population worked three times harder than the rest of us, or contributed three times as much to American productivity. Money earned from tax cuts and minimally taxed financial instruments is not productive income. And while some big earners have developed innovative ideas and leading-edge businesses, it seems fair to say that taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health (pharmaceuticals), and the National Science Foundation (the Digital Library Initiative) has laid a half-century foundation for their idea-building.

So I asked anyone out there to explain, defend, or justify the fact that over 20% of our country's income (it was 7% in 1980) now goes to the richest 1% of Americans.

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Devastating class warfare not good enough for House GOP

Conservatives complain that the Speaker's debt ceiling plan is too namby-pamby

Robert Greenstein at the Center on Budget and Policy Priorities has been doing some invaluable budget number-crunching throughout the ongoing debt ceiling crisis. On Monday he released a "statement" on the new Boehner plan that includes by far the strongest rhetoric I've seen from him to date.

House Speaker John Boehner's new budget proposal would require deep cuts in the years immediately ahead in Social Security and Medicare benefits for current retirees, the repeal of health reform's coverage expansions, or wholesale evisceration of basic assistance programs for vulnerable Americans.

The plan is, thus, tantamount to a form of "class warfare." If enacted, it could well produce the greatest increase in poverty and hardship produced by any law in modern U.S. history.

I will take a closer look at how both the Reid and Boehner plans will impact ordinary Americans tomorrow morning. But for now, with Greenstein's denunciation ringing in your ears, consider this: A significant number of House Republicans oppose the Boehner plan because it does not go far enough.

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Wall Street's War

It's early May in Washington, and something very weird is in the air. As Chris Dodd, Harry Reid and the rest of the compulsive dealmakers in the Senate barrel toward the finish line of the Restoring American Financial Stability Act – the massive, year-in-the-making effort to clean up the Wall Street crime swamp – word starts to spread on Capitol Hill that somebody forgot to kill the important reforms in the bill. As of the first week in May, the legislation still contains aggressive measures that could cost once-
indomitable behemoths like Goldman Sachs and JP Morgan Chase tens of billions of dollars. Somehow, the bill has escaped the usual Senate-whorehouse orgy of mutual back-scratching, fine-print compromises and freeway-wide loopholes that screw any chance of meaningful change.

The real shocker is a thing known among Senate insiders as "716." This section of an amendment would force America's banking giants to either forgo their access to the public teat they receive through the Federal Reserve's discount window, or give up the insanely risky, casino-style bets they've been making on derivatives. That means no more pawning off predatory interest-rate swaps on suckers in Greece, no more gathering balls of subprime shit into incomprehensible debt deals, no more getting idiot bookies like AIG to wrap the crappy mortgages in phony insurance. In short, 716 would take a chain saw to one of Wall Street's most lucrative profit centers: Five of America's biggest banks (Goldman, JP Morgan, Bank of America, Morgan Stanley and Citigroup) raked in some $30 billion in over-the-counter derivatives last year. By some estimates, more than half of JP Morgan's trading revenue between 2006 and 2008 came from such derivatives. If 716 goes through, it would be a veritable Hiroshima to the era of greed.
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Corrupt Banking System - video

This is an interesting and instructive video of how our banking system originated and how it operates.
watch video

on Financial Services Deregulation

There continues to be discussion on who is to blame for financial deregulation near the end of the Clinton administration. So I have gathered together a few articles and commentary on the events and political pressures at that time.

Although many blame Clinton for signing the bill, the vote in Congress was such that a veto by Clinton would likely have been over-ridden and the bill passed anyway.

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The bill then moved to a joint conference committee to work out the differences between the Senate and House versions. Democrats agreed to support the bill after Republicans agreed to strengthen provisions of the anti-redlining Community Reinvestment Act and address certain privacy concerns; the conference committee then finished its work by the beginning of November. On November 4th, the final bill resolving the differences was passed by the Senate 90-8, and by the House 362-57. This legislation (whose voting margins, if repeated, would easily have overcome any Presidential veto) was signed into law by Democratic President Bill Clinton on November 12, 1999.
Wikipedia

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In the United States, Congress can override a presidential veto by having a two-thirds majority vote in both the House of Representatives and Senate, thus enacting the bill into law despite the president's veto. However, a veto may not be overridden if it is a pocket veto, a veto in which the president simply ignores a bill between congressional sessions. The veto override is an example of checks and balances, the process in which various branches of the U.S. government can limit each others' power.
Many states of the U.S. have similar regulations, i.e. a state governor can veto (refuse to sign on) a bill passed by the legislature, and the legislature can override the veto. Most states require a two-thirds majority vote to override.

wikipedia
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The Gramm-Leach bill was passed in a republican held congress, but the vote in the senate was 90-8. That means most of the democrats voted for it too. Clinton's treasury guy, Robert Rubin pushed the bill through and then took a cushy job at Citibank, who had the most to gain since they had already started a merger with Travelers Group insurance. Clinton gave the pen he used to sign the bill to Sandy Weill, the CEO of Citibank, it is now displayed in their headquarters.

You talk about the republicans having control for the first six years of "W"s presidency. Remember that it took several years for the subprime loans started after deregulation to begin failing. The people that took out ARMs that had 2, 3, or 5 years before their rates went up and hoped their income would go up during that time are the ones to blame!

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Edit: "The proposed Financial Services Modernization Act of 1999 would do away with restrictions on the integration of banking, insurance and stock trading imposed by the Glass-Steagall Act of 1933, one of the central pillars of Roosevelt's New Deal. Under the old law, banks, brokerages and insurance companies were effectively barred from entering each others' industries, and investment banking and commercial banking were separated."

1999 Republican Congress
Source(s):
thomas.gov

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De-regulation has been a Republican mantra since Reagan's administration. Clinton did not have a Democratic congress, Republicans the majority in both the House and Senate.

The facts that can be easily checked on the Congress web page.

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Clinton, Republicans agree to deregulation of US financial system

An agreement between the Clinton administration and congressional Republicans, reached during all-night negotiations which concluded in the early hours of October 22, sets the stage for passage of the most sweeping banking deregulation bill in American history, lifting virtually all restraints on the operation of the giant monopolies which dominate the financial system.

The proposed Financial Services Modernization Act of 1999 would do away with restrictions on the integration of banking, insurance and stock trading imposed by the Glass-Steagall Act of 1933, one of the central pillars of Roosevelt's New Deal. Under the old law, banks, brokerages and insurance companies were effectively barred from entering each others' industries, and investment banking and commercial banking were separated.

Campaign of influence-buying

They had good reason, to be sure. The banking, insurance and brokerage industry lobbyists have combined their forces over the last five years to mount the best-financed campaign of influence-buying ever seen in Washington. In 1997 and 1998 alone, the three industries spent over $300 million on the effort: $58 million in campaign contributions to Democratic and Republican candidates, $87 million in "soft money" contributions to the Democratic and Republican parties, and $163 million on lobbying of elected officials.

The chairman of the Senate Banking Committee, Texas Republican Phil Gramm, himself collected more than $1.5 million in cash from the three industries during the last five years: $496,610 from the insurance industry, $760,404 from the securities industry and $407,956 from banks.

Threat to financial stability

The proposed deregulation will increase the degree of monopolization in finance and worsen the position of consumers in relation to creditors. Even more significant is its impact on the overall stability of US and world capitalism. The bill ties the banking system and the insurance industry even more directly to the volatile US stock market, virtually guaranteeing that any significant plunge on Wall Street will have an immediate and catastrophic impact throughout the US financial system.

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Gramm–Leach–Bliley Act -- Wikipedia

The Gramm-Leach-Bliley Act allowed commercial banks, investment banks, securities firms and insurance companies to consolidate. For example, Citicorp (a commercial bank holding company) merged with Travelers Group (an insurance company) in 1998 to form the conglomerate Citigroup, a corporation combining banking, securities and insurance services under a house of brands that included Citibank, Smith Barney, Primerica and Travelers. This combination, announced in 1993 and finalized in 1994, would have violated the Glass-Steagall Act and the Bank Holding Company Act of 1956 by combining securities, insurance, and banking, if not for a temporary waiver process.[1] The law was passed to legalize these mergers on a permanent basis. Historically, the combined industry has been known as the "financial services industry".
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McCain, Obama camps point fingers in banking deregulation, mortgage messes

The 1999 Gramm-Leach-Bliley Act broke down barriers between banks, securities firms, mortgage lenders and insurance companies. That deregulation repealed Great Depression-era bank regulations with the approval of former president Bill Clinton.

The Gramm bill encouraged lending during the strong housing market but has put banks, investment houses and insurance companies in peril since the housing bust which started two years ago. The measure allowed those lending money to sell off those loan portfolios to other companies, thus disconnecting the lending risk.

The Obama camp points out that former U.S. Sen. Phil Gramm was a key architect of the banking and lending deregulation. Gramm is a McCain economic adviser eho could be in the Arizona Republican's cabinet. Since his Senate days ended he has also worked for investment bank UBS.

The Democratic National Committee says that 19 McCain fundraisers and campaign advisers lobbied for mortgage giants Fannie Mae and Freddie Mac. The federal government took over the mortgage groups earlier this month as part of a number of finance and mortgage-related bailouts. A number of other McCain fundraisers and campaign officials have lobbied for American International Group and other finance firms. The Federal Reserve Bank is bailing AIG out with an $85 billion package

McCain links to Fannie, Freddie, AIG and other troubled financial firms include senior campaign advisor Charlie Black, campaign manager Rick Davis and national fundraising cochairman Wayne Berman. Merrill Lynch chief executive John Thain is also a McCain backer and has raised money for the Arizona senator. Bank of America said earlier this week it was acquiring Merrill Lynch.

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UBS Money Laundering: What Did Phil Gramm Know?

In recent days yet another wealthy private customer of the Swiss-based banking conglomerate UBS admitted to criminal fraud in a growing parade of perp walks that could extend into the thousands. It is a case that threatens to ensnare former Sen. Phil Gramm, the Texas Republican who is vice chairman of UBS' investment banking business. Given the widespread involvement of UBS in what the Justice Department alleges were systematic efforts to violate US tax laws, it must be asked: Did Gramm as a top executive have no inkling about what was going on?

Perhaps, but for Gramm this has to be a moment that at the very least tests his ideological commitment to the radical deregulation of banking that he championed during his twenty-four years in Congress. He joined UBS soon after the bank acquired Enron, a company that had gone bankrupt after jumping through the "Enron loophole" in the Commodity Futures Modernization Act, which Gramm had pushed though Congress. Gramm's wife, Wendy, had been an Enron board member and head of its audit committee but failed to sound the alarm before the Houston-based company collapsed. Then UBS itself ran into big trouble because of $37 billion in bad mortgage debt made possible by derivatives market deregulation engineered by then-Sen. Gramm. US taxpayers have had to pony up money to heal UBS' self-inflicted wound. But the bank's involvement with tens of thousands of secret accounts tied to allegations of tax evasion raises starker issues--of possible criminal fraud through practices that Gramm as a senator helped keep opaque.
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PAUL KRUGMAN: The Joy of Sachs

The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us?

First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America. Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away. Third, it shows that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely.

You can argue that such rescues are necessary if we’re to avoid a replay of the Great Depression. In fact, I agree. But the result is that the financial system’s liabilities are now backed by an implicit government guarantee. Now the last time there was a comparable expansion of the financial safety net, the creation of federal deposit insurance in the 1930s, it was accompanied by much tighter regulation, to ensure that banks didn’t abuse their privileges. This time, new regulations are still in the drawing-board stage — and the finance lobby is already fighting against even the most basic protections for consumers.
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U.S. Economy: Consumer Costs Fall Most in Six Decades

The cost of living in the U.S. fell over the last 12 months by the most in six decades, easing concern that government efforts to revive the economy will lead to an immediate outbreak of inflation. The consumer price index dropped 1.3 percent in the year ended in May, the most since 1950, the Labor Department said today in Washington. Prices increased just 0.1 percent last month, less than anticipated, after no change in April.

The lack of sustained gains in sales is one reason companies are finding it difficult to pass increases in fuel costs on to customers. Higher gasoline prices will probably restrain Americans’ discretionary spending at a time when the economy is showing signs of stabilizing. “Inflation is not an issue,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. “There are huge amounts of slack in the economy and demand is quite soft, so it’s difficult to see how inflation can pick up for the balance of the year.”
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The Dirty Dozen

Meet the bankers and brokers responsible for the financial crisis - and the officials who let them get away with it. (More details in Wikipedia)
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China 'worried' about US Treasury holdings

China's premier expressed concern Friday about its holdings of Treasuries and other U.S. debt, appealing to Washington to safeguard their value, and said Beijing is ready to expand its stimulus if economic conditions worsen. Premier Wen Jiabao noted that Beijing is the biggest foreign creditor to the United States and called on Washington to see that its response to the global slowdown does not damage the value of Chinese holdings.

"We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said at a news conference following the closing of China's annual legislative session. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets." Analysts estimate that nearly half of China's $2 trillion in currency reserves are in U.S. Treasuries and notes issued by other government-affiliated agencies.

Wen's comments foreshadowed possible appeals to President Barack Obama, who will meet with Chinese President Hu Jintao at a London summit of leaders of the G-20 group of major economies on April 2 to discuss the global financial crisis. Washington is counting on China to continue buying Treasuries to fund its massive stimulus package. Last month, visiting Secretary of State Hillary Rodham Clinton sought to reassure Beijing that government debt would remain a reliable investment.
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The Great Solvent North

HAS the world turned upside down? America, the capital of capitalism, is pondering nationalizing a handful of banks. Meanwhile, Canada, whose banking system had long been notorious for its stodgy practices and government coddling, is now being celebrated for those very qualities. The Canadian banking system, which proved resilient in the global economic crisis, is finally getting its day in the sun. A recent World Economic Forum report ranked it the soundest in the world, mostly as the result of its conservative practices. (The United States ranked 40th).

Most people don’t know that the vision behind Canada’s banking system, made up of a few large, national banks with branches from coast to coast, actually had its beginnings in the United States. Canada’s system is the product of a banking framework inspired by Alexander Hamilton, the first American secretary of the Treasury. Hamilton envisioned the First Bank of the United States, chartered in 1791, as a central bank modeled on the Bank of England.

Canadians found inspiration in Hamilton’s model, but not all Americans did. In the 1830s, President Andrew Jackson opposed extending the charter of the Second Bank of the United States, perceiving it as monopolistic. Money-lending functions were then assumed by local and state-chartered banks, eventually giving rise to the free-market, decentralized system that America has today.

Today, Canada’s system remains truer to Hamilton’s ideal. The five major chartered banks, the few regional banks and handful of large insurance companies are all regulated by the federal government. Canadian banks are relatively constrained in the amounts they can lend. Canadian banks are required to have a bigger cushion to absorb losses than American banks. In addition, Canadian government regulations protect the domestic banks by limiting foreign competition. They also keep banks broadly owned by public shareholders.
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THOMAS L. FRIEDMAN: Obama’s Ball and Chain

I’m worried. We’ve just elected a talented young president with many good instincts about how to propel our country forward, extend health care to more people, make our tax code fairer and launch a green industrial revolution. But do you know what I fear? I fear that his whole first term could be eaten by Citigroup, A.I.G., Bank of America, Merrill Lynch, and the whole housing/subprime credit bubble we inflated these past 20 years.

I hope my fears are exaggerated. But ask yourself this: Why couldn’t former Treasury Secretary Hank Paulson solve this problem? And why does it seem as though his successor, Tim Geithner, won’t even look us in the eye and spell out his strategy? Is it because they don’t get it? No. It is because they know — like Roy Scheider in the movie “Jaws,” when he first saw the great white shark — that “we’re gonna need a bigger boat,” and they’re too afraid to tell us just how big.

This problem is more complicated than anything you can imagine. We are coming off a 20-year credit binge. As a country, too many of us stopped making money by making “stuff” and started making money from money — consumers making money out of rising home prices and using the profits to buy flat-screen TVs from China on their credit cards, and bankers making money by creating complex securities and leverage so more and more consumers could get in on the credit game.

When this huge bubble exploded, it created a crater so deep that we can’t see the bottom — because that hole is the product of two inter-related excesses. Some banks are in trouble because of the subprime mortgage securities they have on their books that are now worth only 20 cents on the dollar because of widespread defaults.
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Obama: 'There Is No Easy Out' for Wall Street

On the same day his Treasury secretary detailed a $2 trillion plan to stabilize the U.S. banking systems and the Senate narrowly passed an $838 billion economic stimulus bill, President Barack Obama said, "we are in a perfect storm of financial problems." The Dow Jones industrial average dropped 382 points following today's news, and Obama said it's important to recognize that "there is no easy out" when it comes to the current economic crisis.

"Wall Street, I think, is hoping for an easy out on this thing, and there is no easy out," Obama told "Nightline" co-anchor Terry Moran in an exclusive interview in Fort Meyers, Fla. "I think that you have two choices in this situation: you can prolong the agony and shareholders will be happy until they're not happy, and that could be a year from now or two years from now or in the case of Japan, eight years later. Or you can just go ahead and acknowledge that yeah, there's, there's a lot of work that has to be done to put these banks back on a firmer footing."
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Nightline

The Great Crash, 2008: A Geopolitical Setback for the West

The financial and economic crash of 2008, the worst in over 75 years, is a major geopolitical setback for the United States and Europe. Over the medium term, Washington and European governments will have neither the resources nor the economic credibility to play the role in global affairs that they otherwise would have played. These weaknesses will eventually be repaired, but in the interim, they will accelerate trends that are shifting the world's center of gravity away from the United States.

A brutal recession is unfolding in the United States, Europe, and probably Japan -- a recession likely to be more harmful than the slump of 1981-82. The current financial crisis has deeply frightened consumers and businesses, and in response they have sharply retrenched. In addition, the usual recovery tools used by governments -- monetary and fiscal stimuli -- will be relatively ineffective under the circumstances.

This damage has put the American model of free-market capitalism under a cloud. The financial system is seen as having collapsed; and the regulatory framework, as having spectacularly failed to curb widespread abuses and corruption. Now, searching for stability, the U.S. government and some European governments have nationalized their financial sectors to a degree that contradicts the tenets of modern capitalism. Much of the world is turning a historic corner and heading into a period in which the role of the state will be larger and that of the private sector will be smaller. As it does, the United States' global power, as well as the appeal of U.S.-style democracy, is eroding. Although the United States is fortunate that this crisis coincides with the promise inherent in the election of Barack Obama as president, historical forces -- and the crash of 2008 -- will carry the world away from a unipolar system regardless.
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Paul Krugman: The Destructive Center

What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care and nutrition, undermines schools, but offers a $15,000 bonus to affluent people who flip their houses? A proud centrist. For that is what the senators who ended up calling the tune on the stimulus bill just accomplished.

Even if the original Obama plan — around $800 billion in stimulus, with a substantial fraction of that total given over to ineffective tax cuts — had been enacted, it wouldn’t have been enough to fill the looming hole in the U.S. economy, which the Congressional Budget Office estimates will amount to $2.9 trillion over the next three years. Yet the centrists did their best to make the plan weaker and worse.

Mr. Obama’s postpartisan yearnings may also explain why he didn’t do something crucially important: speak forcefully about how government spending can help support the economy. Instead, he let conservatives define the debate, waiting until late last week before finally saying what needed to be said — that increasing spending is the whole point of the plan. And Mr. Obama got nothing in return for his bipartisan outreach. Not one Republican voted for the House version of the stimulus plan, which was, by the way, better focused than the original administration proposal.
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Charlie Rose's Financial Interviews

Mr. Rose interviews the major figures of the day. Here are interviews on our economy that I am sure you will find informative.

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Paul Krugman; Don’t Cry for Me, America

Mexico. Brazil. Argentina. Mexico, again. Thailand. Indonesia. Argentina, again. And now, the United States. The story has played itself out time and time again over the past 30 years. Global investors, disappointed with the returns they’re getting, search for alternatives. They think they’ve found what they’re looking for in some country or other, and money rushes in. But eventually it becomes clear that the investment opportunity wasn’t all it seemed to be, and the money rushes out again, with nasty consequences for the former financial favorite. That’s the story of multiple financial crises in Latin America and Asia. And it’s also the story of the U.S. combined housing and credit bubble. These days, we’re playing the role usually assigned to third-world economies.

For reasons I’ll explain later, it’s unlikely that America will experience a recession as severe as that in, say, Argentina. But the origins of our problem are pretty much the same. And understanding those origins also helps us understand where U.S. economic policy went wrong. The global origins of our current mess were actually laid out by none other than Ben Bernanke, in an influential speech he gave early in 2005, before he was named chairman of the Federal Reserve.

Mr. Bernanke asked a good question: “Why is the United States, with the world’s largest economy, borrowing heavily on international capital markets — rather than lending, as would seem more natural?” His answer was that the main explanation lay not here in America, but abroad. In particular, third world economies, which had been investor favorites for much of the 1990s, were shaken by a series of financial crises beginning in 1997. As a result, they abruptly switched from being destinations for capital to sources of capital, as their governments began accumulating huge precautionary hoards of overseas assets.

The result, said Mr. Bernanke, was a “global saving glut”: lots of money, all dressed up with nowhere to go. In the end, most of that money went to the United States. Why? Because, said Mr. Bernanke, of the “depth and sophistication of the country’s financial markets.” All of this was right, except for one thing: U.S. financial markets, it turns out, were characterized less by sophistication than by sophistry, which my dictionary defines as “a deliberately invalid argument displaying ingenuity in reasoning in the hope of deceiving someone.” E.g., “Repackaging dubious loans into collateralized debt obligations creates a lot of perfectly safe, AAA assets that will never go bad.”

In other words, the United States was not, in fact, uniquely well-suited to make use of the world’s surplus funds. It was, instead, a place where large sums could be and were invested very badly. Directly or indirectly, capital flowing into America from global investors ended up financing a housing-and-credit bubble that has now burst, with painful consequences.

Paul Robin Krugman is an American economist, columnist, author and intellectual. He is a professor of economics and international affairs at Princeton University, and a columnist for The New York Times. In 2008, Krugman won the Nobel Memorial Prize in Economic Sciences "for his analysis of trade patterns and location of economic activity". Krugman is well-known in academia for his work in international economics, including trade theory, economic geography, and international finance.  Wikipedia    A link to Mr. Krugman's essays is in the Featured Observer panel of  Our Economy.

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Rich got richer as their tax rates fell in Bush years, data show

The average tax rate paid by the richest 400 Americans fell by a third to 17.2% through the first six years of the Bush administration, and their average income doubled to $263.3 million, new data show. The 17.2% in 2006 was the lowest since the Internal Revenue Service began tracking the 400 largest taxpayers in 1992, although they paid more tax on an inflation-adjusted basis than for any year since 2000.

The drop from 2001's tax rate of 22.9% was largely because of President Bush's push to cut tax rates on most capital gains to 15% in 2003. Capital gains made up 63% of the richest 400 Americans' adjusted gross income in 2006, or a combined $66.1 billion, according to the data. In all, those taxpayers reported a combined $105.3 billion in adjusted gross income in 2006, the most recent year for which the IRS has data.
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David Frum: Wall Street's new welfare queens, too greedy to be smart

There is an urgent warning for Republicans in the weekend’s two big financial stories. On Sunday, the New York Times reported that the Obama administration is considering much tighter regulation of hedge funds and rating agencies. Such a story jangles Republican nerves – and calls us out to fight.

But then there’s this: This morning, the Financial Times reported that Merrill Lynch’s new owner, Bank of America, signed off on $4 billion worth of executive compensation in a quarter in which Merrill suffered a $15 billion loss. Worse: BA seems to have tilted the bonus formula so that more was paid in cash, less in stock.

BA has been of course a huge recipient of federal bailout funds. And so these decisions open the door for President Obama and the Democrats to accuse the banks of wasting taxpayer dollars. It does not help that former Merrill CEO John Thain happened to redecorate his office at this time for $1.2 million, a sum that reportedly included $87,000 for a single rug. Rush Limbaugh defended Thain in a weekend interview with National Review’s Byron York.
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Republicans Approach Obama With Clenched Fists

During his inaugural address, President Barack Obama told the Muslim world: “we will extend a hand if you are willing to unclench your fist.” He could just as easily have been speaking about Congressional Republicans. Obama has courted Republican support, and emphasized his openness to hearing their ideas (in sharp contrast to Bush’s ignoring Dems). But the GOP has ignored his overtures and kept their fists clenched. From delaying the inevitable confirmations of Hillary Clinton and Eric Holder, to trying (unsuccessfully) to kill the Lilly Ledbetter Fair Pay Act (S. 181), to the demand by GOP House Whip Eric Cantor that the stimulus package do more for the wealthy while eliminating funds for weatherizing low-income housing, Republican Congress members have already demonstrated a preference for opposition and obstructionism. As Rush Limbaugh exhorts his followers to ensure that Obama “fails,” Republicans are rejecting the electorate’s demand for change. Those fearing that the President would follow Bill Clinton’s “triangulation” strategy in his dealings with Congress should stop worrying; such concerns already appear misplaced.
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U.K. Economy Shrinks Most Since 1980, in Recession

The U.K. economy shrank more than economists forecast during the fourth quarter in the biggest contraction since 1980 as the financial crisis crippled the banking industry and mired Britain deeper in the recession. Gross domestic product fell 1.5 percent from the previous quarter, the Office for National Statistics said in London today. Economists had predicted a 1.2 percent drop, according to a Bloomberg News survey. The economy has now shrunk in two quarters, the conventional definition of a recession.

“This is undeniably grim,” said Stewart Robertson, an economist at Aviva Investors in London, which manages about $230 billion in assets. “Two or three quarters more like this and you’re talking about depression, not recession. This should hasten activity to address the credit and money market issues.”
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Foreign Affairs: The Great Crash, 2008

The financial and economic crash of 2008, the worst in over 75 years, is a major geopolitical setback for the United States and Europe. Over the medium term, Washington and European governments will have neither the resources nor the economic credibility to play the role in global affairs that they otherwise would have played. These weaknesses will eventually be repaired, but in the interim, they will accelerate trends that are shifting the world's center of gravity away from the United States.

A brutal recession is unfolding in the United States, Europe, and probably Japan -- a recession likely to be more harmful than the slump of 1981-82. The current financial crisis has deeply frightened consumers and businesses, and in response they have sharply retrenched. In addition, the usual recovery tools used by governments -- monetary and fiscal stimuli -- will be relatively ineffective under the circumstances.

This damage has put the American model of free-market capitalism under a cloud. The financial system is seen as having collapsed; and the regulatory framework, as having spectacularly failed to curb widespread abuses and corruption. Now, searching for stability, the U.S. government and some European governments have nationalized their financial sectors to a degree that contradicts the tenets of modern capitalism. Much of the world is turning a historic corner and heading into a period in which the role of the state will be larger and that of the private sector will be smaller. As it does, the United States' global power, as well as the appeal of U.S.-style democracy, is eroding. Although the United States is fortunate that this crisis coincides with the promise inherent in the election of Barack Obama as president, historical forces -- and the crash of 2008 -- will carry the world away from a unipolar system regardless.
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U.S. economy may sputter for years

Transfixed by the daily spectacle of dismal economic news and wild Wall Street swings, few Americans have looked up to see what a wide array of economists say lies beyond the immediate crisis. The sleek racing machine that was the U.S. economy is unlikely to return any time soon despite the huge repair efforts now underway. Instead, it probably will continue to sputter and threaten to stall for years to come. The prospects are so gloomy, according to a recent study, that unemployment may be slightly higher by the time President-elect Barack Obama's first term ends.

The damage done by plunging house and stock prices, the failure of other major economies to be independent sources of growth and hidden weaknesses in America's past performance have crippled nearly every actor in the nation's economic drama.  None -- save perhaps the government -- retains the power to push the economy back to speeds it regularly achieved during much of the last generation, economists say.  

"That is going to feel like stagnation" to most people, said John Lonski, chief economist at Moody's Investors Service.  "We're in a post-bubble global recession, and post-bubble recessions are lethal for growth," Stephen S. Roach, chairman of Morgan Stanley Asia, said from Beijing.  "It will be a long time before the world experiences anything more than anemic recovery."
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The Madoff scandal: Follow the feeders

The crucial roles played by credulous middlemen and clueless regulators. A week after Bernard Madoff’s vast alleged Ponzi scheme came to light in mid-December, a thief made off with a $10,000 copper statue from his Florida estate. Since then, dozens of Madoff-related items have appeared for sale on eBay, a website, including a disaster-recovery kit for employees of his securities firm and opera glasses emblazoned with its logo. An embarrassingly large number of the victims were supposed to have been highly sophisticated. 

Explaining its failures is a task that will fall to the SEC’s incoming chairwoman, Mary Schapiro. But the commission can partially redeem itself by quickly getting to the bottom of some unanswered questions. Who, apart from Mr Madoff, was party to the scam? When did it start? And how much money is left? Much of the $50 billion that he has confessed to losing was phantom profit that only existed on customers’ account statements.
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