On Public Radio this morning an economist gave forth with some frightening numbers about this country private debt—credit card and home and business debt, not the public government variety. This private debt load was equal to about 50 percent of GDP in 2000 but had grown to 100 percent of GDP by 2007. And when was the last time private debt was 100 percent of GDP? “1929,” said the economist. Such numbers by themselves don’t tell the whole story, however. The reason is that debt...

President Obama’s proposed federal budget features a dramatic change in the tax code of this country. In the Bush years the aim was to ease the tax burden of the richest Americans, those making more than $250,000, leaving the rest of us with a greater burden when it comes to keeping the federal government fiscally afloat. Under Obama’s proposals upper income people would be taxed more with higher marginal rates and fewer deductions, meaning they would carry a bigger share of the overall...

I used to live in a large apartment complex. I wasn’t friendly with a lot of the other tenants but easily recognized most of them by sight. The other day I saw one them again. An old woman, almost certainly well past seventy, in the supermarket. She was bagging my groceries. The recognition gave me an uncomfortable feeling, but it was clear that it made her feel much, much worse because she also recognized me. We had been a kind of peers as joint tenants in that apartment complex. In the market...

Some prominent Democrats and Republicans in Congress along with some leading economists say it’s time to nationalize American banks. Some other leading Democrats and Republicans in Congress along with some prominent economists say no. But the argument here is silly. Bank nationalization is already well underway. Twenty-five banks were taken over by the government last year and more than a dozen so far this year. Their deposits were guaranteed and remaining assets sold off by federal officials....

President Obama presented a plan to aid the housing market yesterday. It had some good points and some drawbacks. It will give money to some people who don’t deserve it and leave a lot of people who do deserve help still out in the cold. It was imperfect in a number of important respects. And yet… For the first time since the financial crisis began to make itself felt 18 months ago an official government plan to address at least part of this mammoth problem appears to be well thought...

In the just-ended acrimonious debate over a stimulus package, one critical point was largely ignored by all parties—and the media as well. Both sides of this debate were expressing priorities that have to be appropriately addressed if we are to emerge whole from the present financial crisis. The Republican opposition to the stimulus measure was totally wrong in the sense that we need to spend and spend copiously to somehow reanimate an increasingly slumping economy, This is not a time to skimp,...

Wall Street, a place of cons and schemes, And fortunes built on doctored dreams, And fees and spreads and in-bred cronies, I counted fifteen thousand phonies. The SEC patrols these parts, Whose tortured ways it maps and charts, With num’rous rules, it seeks to beat, White collar crimes that ‘fest The Street. But really, guys, what kind of rules Could cleanse this gilded nest of fools? http://www.wallstreetpoet.com

Two years ago the economic elite were warning about this country’s nearly non-existent saving rate. The great fear then was that the nation was living beyond its means and excess spending had to stop. These days the government is betting the nation’s future and its our own solvency on extraordinary efforts to boost spending by the private sector with its own huge infusions of borrowed and newly minted money. If this causes a too great a spike in lending by banks and too much actual spending...

Yes, a stimulus bill was needed. But conservatives who worry about the soaring federal debt have a point… The Debt Song of The Potomac (In the style of Longfellow’s “Hiawatha”) On the shores of the Potomac By this river’s murky waters Policy is shaped and crafted Opposition views ignored In the chambers of the mighty Where once issues were debated When the deficit is mentioned Legislators just look bored. Will such policies so ditzy Be allowed to last forever Will our Asian...

The reason so many Americans have been so down on government attempts to boost the economy is easy to understand. Until now, all the hundreds of billions allocated for this stated purpose, and the trillion more that might soon be piled atop that total, are not designed to boost the economy at all. Rather, this money is going to replace loses incurred by bumbling, greedy financial institutions. And if this enormous gifting actually succeeds in “bailing out the banks,” it will improve...

Here’s some Wall Street tidbits that didn’t quite make it into the original versions of Shakespeare’s plays: Macbeth ponders the meaning of trading during a market slump: Investing, and investing, and investing, Sinks to new creepy depths from day to day As battered equities do tumble time, And all the cap gains we thought secure Just flit away like dreams. Rise, rise, down market! Stocks now dwell in the shadows, a poor play Of daily dips and slips that conjure rage And then decline some more....

It’s a basic military strategy. When you can’t hold a given line you withdraw, regroup, strengthen your own forces while your enemy over-extends himself, then counter-attack and win the field. That’s what has to be done now with the stimulus bill. The measure now in a conference between the House and Senate isn’t big enough to really pull our fast-falling economy out of its swoon. But the public doesn’t yet fully buy into that fact, and is temporarily gulled by Republican...

The stock market took a dive today. The Dow dropped more than 380 points. Why? Because the financial life support program announced by the new Secretary of the Treasury has a “stress test” provision. More specifically, in order to get government bailout money in the future banks will have to prove that, even if economic times get tougher, they will be able to repay government loans. For anyone who has ever had to negotiate a business loan from a bank such a provision might evoke the response:...

Bipartisan’s a lovely word It comes across so brotherly But for our own Republicans It has a meaning otherly. Of course (they say) we want to help It’s our country, too (they say) Though to acquire this precious gift Go our way or we won’t play. More satirical verse at: http://www.wallstreetpoet.com

The Next Depression Sinking and sinking in a sickening swirl Retail sales fall short of retailer goals Stock prices slide, well-run businesses fold Massive layoffs raise unemployment fears A loose-lipped faith in endless growth has died Replaced by loud cries for costly bailouts Good deals lack all support, while ponzi scheme Quickly acquire devoted followings. Surely, the Invisible Fist is clenched Surely, the Next Depression has begun The Next Depression! Just the sound of...

Americans are furious about Wall Street bonuses. They believe these rewards are massively excessive, undeserved, and in the current economic environment totally inappropriate. All true. But what should really be getting people angry is that these bonuses in large measure are responsible for this country’s present economic woes. The size of Wall Street bonuses have long been linked to the income a given trader or other Wall Streeter brings in to his or her company’s coffers. And these...

Public support for the President’s stimulus package is fading fast. And the reason should be obvious to the people in his new Administration but clearly isn’t. The plan’s popularity is a victim of bipartisanism. Obama was elected because of a single word: Change. The public wanted change. Big change in a host of fields. That was what everyone who listened to the public with anything like an open mind was hearing. But the perpetuators of conventional wisdom in Washington, in the...

Most Americans are outraged by the size of Wall Street bonuses, and the fact that they have been paid even when company performances have been sub-ghastly, and while some firms are still only in business because of government bailouts. Wall Streeters nonetheless continue to defend these bonuses with a variety of rationales. Who’s right in this debate? Well, it really doesn’t matter, does it. And the reason comes down to The Street’s own prime axiom: The man with the gold makes the...

I recently saw a debate on Public Television between two economists. One strongly recommended a payroll tax holiday as a very good way to immediately get money into the hands of both businesses and consumers—with Social Security funded by the payroll tax funded instead during this holiday by TARP money. This is an idea that I and a fair number of other people have advocated for months because it is so sensible. But the other economist in this discussion dissed the idea. Why? Because, he said,...

The economic experts are almost unanimous. We have to pump up bank balance sheets with bailout money to save the economy. The general public is nearly as unanimous in thinking the best way to help a badly ailing economy is boosting the spending power of businesses and consumers. So who is right? The general public, of course. Banks make loans (with interest) to businesses and consumers. That’s what they do. They are merely enablers. If needed money came in some form from the government, there...

The Debt Song Of The Potomac On the shores of the Potomac By this river’s murky waters Policy is shaped and crafted Opposition views ignored. In the chambers of the mighty Where once issues were debated When the deficit is mentioned Legislators just look bored. Will such policies so ditzy Be allowed to last forever Will our Asian banker lenders And the markets turn blind eyes To a spending binge so flagrant Only Beltway types will marvel When these lenders pull the debt plug And the fun time ups...

One of the last spasms from an outgoing Bush Administration was a ruling that allows doctors and other medical professions to opt out of certain medical treatments if they violate a personal sense of right and wrong. It was aimed, of course, at medicos who oppose a woman’s right to choose an abortion. But it got me wondering if this ruling might have larger implications. Suppose, for example, that a patient comes in with a venereal infection. If the patient is married, the infection probably...

When I grow up I want to be a Wall Street analyst. It has great job security because it never requires that you succeed in what you’re supposed to be doing. Suppose you’re a doctor. You misdiagnose one patient after another and pretty soon you have no patients and maybe even lose your license to practice. Or suppose you’re an attorney and you lose 50 consecutive cases. Pretty soon you have no more clients and might even find yourself the subject of a law suit. No such professional...

These days when I hear the financial news I think of Alfred E. Neuman. Remember Alfred? Mad comics’ doofy looking stalwart? Remember his pet phase? “What? Me worry?” That phrase keeps popping into my mind: A projected $1.2 trillion federal deficit in fiscal 2009. What? Me worry? With perhaps an $800 billion Obama stimulus spending package added in. What? Me worry? With trillion dollar-plus deficits for several years to come. What? Me worry? And an economy that can’t possibly...

While anguishing about the various awful messes George Bush leaves behind, we might take a moment or two to feel grateful for the things he wanted to do but didn’t manage to inflict on this country and the world. In this regard consider Social Security. One of his announced priorities when he was re-elected in 2004 was to “reform” the Social Security system—to partially privatize it. Even with a Republican-controlled Congress in the first two years of his second term, however,...